Thursday, May 28, 2020

Malaysia-Thailand celebrate 40 years of success in joint petroleum development

Sep 20. 2019
Sonthirat Sonthi-Jirawong, Energy Minister
Sonthirat Sonthi-Jirawong, Energy Minister
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The Malaysia-Thailand Joint Authority (MTJA) is celebrating the 40th anniversary of the signing of the memorandum of understanding for petroleum development in the Joint Development Area (JDA).

The JDA is considered a prime example of bilateral cooperation between two countries sharing a maritime border, finding a way to jointly develop an area with overlapping claims for the benefit of both parties. 

Representatives of both parties at the anniversary celebration on Friday reiterated their commitment to continue the partnership. 

Energy Minister Sonthirat Sonthi-Jirawong said that Thailand and Malaysia have shared a long partnership, and have shared elements of culture, society and history for many centuries with the shared mindset of peace and cooperation. 

“The Malaysia-Thailand Joint Authority is considered the beginning of a grand mission between two countries to work on behalf of our governments for the benefit of both countries in the Malaysia-Thailand Joint Development Area, which spans a total of approximately 7,250 square kilometres. The agreement also includes sharing cost and benefits from the exploration and production of petroleum under the Production Sharing Contract over the course of 50 years, which shares responsibilities and profits between the two governments in a 50:50 ratio. 

Malaysia's Minister of Economic Affairs of Malaysia Azmin Ali jointly presided over the event with Sonthirat.

Dr Kurujit Nakornthap, MTJA Thai co-chairman, added that this area is of great importance and has created enormous benefits for Thailand because it is a key source of natural gas. The 509 million cubic feet per day of gas Thailand draws from the source accounts for16 per cent of the country's natural gas procurement (3.252 billion cubic feet per day). This procured source is divided into two sections. The first section – 163 million cubic feet – is transported to Songkhla province and Chana Power Plant to become the main source of fuel for logistics in the southern-most provinces, and to be a source of NGV 12 gas at fuel stations across Surat Thani, Nakorn Si Thammarat, Songkhla and Pattani provinces. 

Natural gas is the main source of fuel for the production of electricity at Chana Power Plant, which is a crucial element of the economic security for businesses and households of the South. Secondly, 346 million cubic feet of the gas from the JDA is sent to Rayong province to become the raw material for the petrochemical industry, as well as fuel in the production of electricity for Central and Eastern provinces of Thailand.

Assessment of the potential of petroleum in the area by the MTJA has concluded that there is still a high volume of natural gas, which can create energy security for both Thailand and Malaysia for at least the next 20 years, and will also create other related benefits for the population and communities in the surrounding areas for both countries as well. These benefits include the promotion of the use of raw materials, increased employment, stimulation of development of economics and industry, the development of related infrastructure, as well as being a concrete example for the international community of beneficial ways to resolve conflicts over disputed areas of land and sea.

Rahamat Bivi Binti Yusoff, MTJA Malaysian co-chairman, said that the MTJA has been working for the past 40 years with great cooperation from Thailand. The JDA is incredibly important in demonstrating the possibilities for collaboration and cooperation in solving a disputed maritime border, she said.

Currently, the JDA has three blocks of production of petroleum and natural gas, which are A-18, B-17, C-19 and B-17-01, that produce a variety of economic benefits, including employing more than 50,000 people and their support of 16 research grants for universities with a value of approximately US$25 million. Research in 2019 has also demonstrated that the area can produce around 1,200 million cubic feet per day of natural gas in line with agreements, an average of 16,700 barrels per day of condensate, which could provide a combined income for the two countries of around $10 billion.

In addition to the income generated, there are also “intangible profits” for both sides, such as the exchange of knowledge, skills development, increased capacity for production, and the growth of a strong base for research in the production of natural gas directly at the source. 

After the contract period of the agreement in 2029, both countries believe that there will be continued cooperation in this area with increased parameters for the work done there to lift the quality of life and way of life for the people living in the area. It will also continue to create direct improvements for the economies of these areas, as well as create potential for other similar cooperation projects with other countries in Asean.

In addition to development in the energy sector, the two countries also have a framework for building sustainability both short-term and long-term in the form of an   MTJA fund that focuses on research into technology and clean energy and creating more participation in solving climate change. 

The focus will now be on deeper research, creating genuine participation in education and knowledge-sharing so that this knowledge can be passed on to the next generation with the aim of true and continued sustainable development for everyone.

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