'No threat' to energy security

Energy Minister Narongchai Akrasanee said yesterday that the decision to halt petroleum concession bidding has no significant impact on the industry and his government was ready to introduce a production-sharing scheme in the amendment of the Petroleum Act.
“The delay is not that long and it’s pretty much clear when the concession bidding would open,” Narongchai told reporters.
The amendment to the law would not dramatically change the petroleum resource arrangement but simply clarify on production-sharing, he said.
The decision to delay the 21st round of concession bidding for exploration and production of petroleum, made by the joint meeting of the Cabinet and the junta on Tuesday, has worried investors, notably those who had submitted bids.
Narongchai said the government would return the documents to investors who had submitted proposals earlier and expected they would not sue the government for compensation.
Surong Bulakul, PTT’s chief operating officer, said there were only three petroleum exploration and production regimes in the world – the concession system that Thailand has used for more than 40 years, production sharing, and exploration contract.
“The production-sharing system is not that bad but there are many problems such as how to share and who will get the petroleum first. Timing is important because oil prices change fast,” he said.
“Importantly, costs will be allowed to be deducted prior to the sharing and thus it demands high management efficiency and transparency. The question is whether Thailand has these attributes.”
Exploration contract, meanwhile, is a method used in oil-rich countries like Saudi Arabia. Hence it is crucial that every party has to first agree if Thailand has plenty of petroleum resources or not.
The decision to delay was made after strong pressure from a civic group who wanted to amend the law to enable the production-sharing system in the petroleum deal.
The government has set up a joint government-civic group to brainstorm solutions for the law amendment.
Rosana Tositrakul, the former Bangkok senator now in the National Reform Council, who represented the civic group in the joint panel, said she had got an invitation to the first meeting on March 3 but did not know yet the scope of work of the panel.
The civic group and Democrat Party yesterday praised the prime minister’s decision and said they would push for amendment of the law on fair competition, transparency and more public interest.
Panthep Phuaphongphan, a member of the joint government-people committee, said his group would push ahead the amendment of the law to have more alternatives for utilisation of petroleum resources. The law should allow more competition in the petroleum industry as well as to have more transparency in the process of investment deal, he said.
Former prime minister and Democrat leader Abhisit Vejjajiva yesterday said amendment of the Petroleum Act should eliminate the weak points of the current system by improving the government’s bargaining power and maximising their benefit from managing the energy. Any earning benefit should be fairly allocated to the people, he said. The law should protect the rights of people, who were affected by petroleum exploration and manufacturing, he added. The law also should increase the choice for the government to be able to apply other systems in addition to the concession, he said.
Abhisit said the people who opposed the 21st round of petroleum concession bidding have good intentions. They don’t need to take any responsibility for the delay in the concession bidding, he said. “Based on reasonable assumption, I’m confident that if the prime minister allows amendment of the Petroleum Act, there will not be any significant impact on energy stability. The government, however, needs to manage and govern such an amendment to really benefit the country. The general public should be informed about all the facts,” said Abhisit.
Abhisit said that for the 21st round of bidding for oil and gas concessions, even state officers anticipated that the amount of petroleum from the drilling area would not be huge. Small amounts of petroleum had been earned from the 19th and 20th rounds of bidding concessions and the private sector had already explored the drilling area identified in the 21st round. They, however, had returned the plot as it was not worth the investment.