Thailand: Bids for petroleum blocks face delay

Thailand: Bids for petroleum blocks face delay

The bidding for the Erawan and Bongkot petroleum blocks in the Gulf of
Thailand may be delayed further, from next March to the second quarter of
2017, says Energy Minister Anantaporn Kanjanarat.

The Energy Ministry had aimed for the new auction of gas fields to take
place in the first quarter of next year.

Gen Anantaporn said the potential delay stems from complications with the
amended Petroleum Act. He did not elaborate.

But energy experts who declined to be named said there is no problem with
the revised Petroleum Act. They pointed instead to the Petroleum Committee,
which remains reluctant to select a method of benefit sharing.

"They have not yet decided which method will better benefit Thailand in the
long term, and it's not an easy task because no one knows for sure which one
is better," said an energy expert. "But what they know for sure is that
activists are ready to attack them if the committee makes any decision that
contradicts their demands."

The revised Petroleum Act offered hope for a solution to the conflict
between the energy industry and activists over the appropriate formula for
sharing benefits from the petroleum fields.

The cabinet and the National Legislative Assembly (NLA) since June have
considered the amendment to the Petroleum Act, which would introduce two new
structures for oil and gas development in Thailand.

Also, under the current version of the law, before the bidding gets under
way, the Petroleum Committee has to choose between the production sharing
contract system or a service contract system as the business model for the
concession system.

Once the committee has decided which model is most beneficial they have to
propose to the NLA to consider the final amendments to the Petroleum Act.

"If things go as planned, the principles and conditions for the auction are
expected to be finalised by December after an appraisal of the costs for
decommissioning the petroleum rigs," an energy expert said.

The decommissioning cost is estimated at US$7 billion.

If the auction can kick off in June of next year, the Petroleum Committee,
which is tasked with overseeing the process, is expected to spend some time
reviewing each applicants' proposal. Bidding results are expected to be
announced by next September.

The concession for the Erawan block (B10-B13), now operated by Chevron
Offshore Exploration and Production, is scheduled to expire in 2022. The
concession for the Bongkot block (B15-B17), operated by PTT Exploration and
Production Plc, is set to expire in 2023.

The Erawan block now produces an average of 1,240 million standard cubic
feet per day (MMSCFD) of gas, while the Bongkot block produces 840 MMSCFD.
The country's daily gas demand, by contrast, is 4,300 MMSCFD.

However, the two operators have been asked to maintain production volume
before the auction is open in March next year to prevent disruptions to
power plants' operations.

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Link to Original Article:
http://www.bangkokpost.com/business/news/1129665/bids-for-petroleum-blocks-f
ace-delay

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com