Thailand to offer first oil, gas-exploration licences in 7 years

Thailand plans to offer new licences to explore for oil and gas next week for the first time in seven years, as the net oil importer seeks to offset declining supplies from fields in the Gulf of Thailand.

Securing new supplies is important for energy security because existing reserves in the gulf may last for only seven years, Energy Minister Narongchai Akrasanee said in an interview yesterday. A list of potential investors may be complete by the end of the year, he said.

A PTTEP oil rig off Chumphon province that was relocated due to falling output. The government will offer concessions for 29 exploration areas offshore and onshore in the central and northeast provinces, according to the Department of Mineral Fuels. (Bangkok Post photo)

Thailand's natural gas resources are declining as an expansion of Southeast Asia's second-biggest economy increases demand and state energy subsidies encourage consumption. The country's proven natural gas reserves plunged 43% over the past decade to 8.41 trillion cubic feet, from 14.75 trillion in 2003, data from the Department of Mineral Fuels shows.

"Because of the very distorted prices, we have been dependent too much on natural gas to the point where we have to start importing more and more," Mr Narongchai said in his office in Bangkok. "So we would want to produce or secure more supply from local sources by means of allowing a new round of exploration and production permits."

The government will offer concessions for 29 exploration areas offshore and in the central and northeast provinces, according to the Department of Mineral Fuels. Most will be onshore blocks in the northeast, close to Thailand's border with Laos, where recovery levels may be higher, Mr Narongchai said.

PTTEP bid

"We're studying the possibility of joining the bid and the potential of petroleum fields in the new round," Tevin Vongvanich, chief executive officer of PTT Exploration & Production Pcl, said in a mobile phone text message. The company is Thailand's largest publicly traded explorer and a unit of state-owned PTT Pcl.

The new concessions will be based on royalties rather than production-sharing, "because we don't know what we have," Mr Narongchai said. "If you set conditions on production sharing somebody may not have any product for you to share."

Thailand, which relies on gas for most of its electricity generation, will also continue to secure more supplies from neighbouring Myanmar, Mr Narongchai said. Natural gas from Myanmar accounts for 20% of total consumption, according to the Department of Mineral Fuels.

This undated file photo shows a natural-gas drilling platform in the Gulf of Thailand. Thailand’s natural gas resources are declining as an expansion of Southeast Asia’s second-biggest economy increases demand and state energy subsidies encourage consumption. (Unocal Corp photo)

Thailand imported 85% of its crude oil use of 1 million barrels a day last year. It consumed 4.82 billion cubic feet a day of natural gas, with 20% coming from Myanmar and about 4% from imports of liquefied natural gas, according to government data. Natural gas from local sources totalled 3.66 billion cubic feet a day, equivalent to 76% of demand.

Cambodia talks

Chevron Corp., which has explored petroleum fields in Thailand since 1962, supplies about half of Thailand's gas demand, according to the company's website.

Thailand's government resumed talks two weeks ago with neighbouring Cambodia on overlapping claims in the Gulf of Thailand, Narongchai said.

Development of the 26,000 sq-kilometre area, more than twice the size of Qatar, has been stalled for more than three decades. Pichai Naripthaphan, a former Thai energy minister, said the disputed zone may contain enough gas to secure Thailand's supply for 50 years.