Gas-concession plan due this year, dept says

The concession term of Chevron Thailand Exploration and Production in the Erawan field and that of PTT Exploration and Production in the Bongkot field, were to originally expire in 2012, but were extended to 2022 by the Energy Ministry in 2011. Under current concession laws they can extend their concessions only once.

Songpope said that if the department failed to produce a clear directive for both concession holders by 2017, they might decide to slow down the investment in further exploration after 2017, as it would not be commercially viable for them to continue. The energy ministry’s committee has set up a subcommittee tasked with solving the issue within the next couple of years.

He said the department expected to finish the framework on plans for dealing with the concessions before the end of the year. This, he said, might include a new round of concession extensions or the opening of new concession bidding for the two fields. There were over 30 optional solutions, which could be whittled down to between four and five solutions. They would then be forwarded to the government to make a final decision.

Songpope said, however, that the current situation would not disrupted the country’s natural gas production. The combined supply from both fields accounts for more than half of the country’s total natural gas consumption. The Erawan field and Bongkot field have a capacity of over 1.2 billion cubic feet per day and almost 1 billion cubic feet per day respectively. The most important thing was first to find out how much natural gas reserves remained in the two fields in order to determine the most appropriate response.

Songpope also said the country would soon open the 21st round of bidding for petroleum exploration and production concessions. If no new supply was found, the country would have to keep its production capacity of natural gas at only 3.6 billion cubic feet per day for the next five to 10 years, and crude oil production at 150,000 barrels per day for the next five years, before production of both gas and oil would begin to decline.

The winners of this 21st round will be subject to the "Thailand Three" system – an annual step-up royalty of five per cent to 15 per cent; 50 per-cent tax on net profits, and an annual incremental special benefit payment from zero per cent to 75 per cent, depending on revenue and additional investment for exploration. The concessions for the 22 fields awarded before 1989 are under the "Thailand One" system, while 54 fields are under Thailand Three.

Songpope added that the country was already importing 740-million cubic feet of LNG per day to substitute natural gas in generating electricity. The department, he said, was already planning to build a second LNG depot with the same storage capacity as the first one – 5 million tonnes.

Last week Energy Minister Pongsak Ruktapongpisal said the country’s petroleum-concession system could help save Bt500 billion per year in energy imports and create many jobs for Thais.

Meanwhile, Songpope said that since the launch of petroleum concessions in Thailand, there had been no incidents concerning oil leaking from any of the fields, either at land or sea, as the fields were only small. The operations of the land and sea fields worked on a closed system.