Gas production sharing deals to be proposed

Energy Minister Siri Jirapongphan said that the auction would be different from previous ones because the bids will be under a production-sharing contract (PSC), whereas previously Thailand used to agree to exploration deals on a concession basis.
The move came after the NEPC acknowledged the terms of reference in principle on March 8.
Concessions to the Erawan-Bongkot gas fields will expire in 2022 and 2023. Both gas fields currently have a combined output of 2.1 billion cubic feet a day.
Veerasak Pungrassamee, director-general of the Department of Mineral Fuels, said the terms of the auction have been determined to allow the private sector to gain joint management rights with the government under the PSC for both the Erawan and Bongkot gas fields.
Private bidders are required to employ experienced Thai workers who have worked on both fields and they should comprise no less than 80 per cent of total staff, he said.
The Energy Ministry expects the auction plan for both fields to gain approval at the NEPC meeting on April 23 before forwarding to the Cabinet for approval and announcing the auction to prospective bidders in late April-early May.
The pre-qualification process is expected to begin in the middle of May, while bidding proposals will be invited in late May. The ministry expects to determine the winners in late December this year and sign the contract in February 2019.
Bidders are required to share 50 per cent of the profit with the government.
Somporn Vongvuthipornchai, chief executive officer at PTT Exploration and Production, said the company still plans to invest in Bongkot in order to maintain production until 2021, one year before the concession ends. If PTTEP wins the auction, it will revise its investment plan in accordance with the government policy, he said.
“Auction under the PSC is different from the earlier concession system and the government will have more control over activities. Several operations must gain the government’s approval and several procedures could lead to delays and higher costs. Meanwhile, we have to wait for more clarity from the government,” he said.
Regarding the removal of production units, he said he could not disclose the figures. The company, however, has set aside a Bt2-billion budget for all projects that have been recorded as non-current assets.
The Department of Mineral Fuels expects PTTEP to join its partner Total E&P Thailand of France, and Chevron Thailand of the United States to team up with Mitsui Oil Exploration of Japan to participate in the auction.
Mubadala Petroleum of the United Arab Emirates is also interested to join the auction, while China National Offshore Oil Corporation, China’s third-largest oil giant has not made a move yet.