Thailand: PTTEP and Petronas discuss joint project

Thailand: PTTEP and Petronas discuss joint project

PTT Exploration and Production Plc (PTTEP), the only SET-listed upstream
petroleum firm, plans to co-develop oil and gas resources with Malaysia's
national oil and gas company, Petroliam Nasional Berhad (Petronas) to
increase petroleum output.

PTTEP's chief operating officer Phongsthorn Thavisin said talks between the
two companies began when oil prices collapsed in 2014. The official
negotiations are expected to be finalised by the end of this year.

Tentatively, the two companies plan to set up a new co-development project
to operate in the areas of the previous project Carigali PTTEPI Operating
Company Sdn Bhd (CPOC), which is a joint venture under the Malaysia-Thailand
Joint Authority. The areas overlap and are claimed by both countries.

Mr Phongsthorn said this new co-development will allow PTTEP to use its oil
and gas development and production expertise in small oil and gas traps,
which are mostly in the Bongkot gas blocks in the Gulf of Thailand.

PTTEP has been operating on the offshore Bongkot gas block for almost 24
years. The long operation period has helped the company gain knowledge on
increasing production capacity from 150 million standard cubic feet per day
(MMSCFD) in 1992 to 1,000 MMSCFD today, thanks to the Gulf of Thailand
Business Model (GoTM).

Under the new co-development project, PTTEP will help provide a
cost-competitive model for the GoTM to produce more petroleum, particularly
from small petroleum wells (or petroleum traps) as Petronas normally
specialises in exploration and production in big petroleum blocks.

"If the deal is successful, it will also help increase output in the CPOC
area," said Mr Phongsthorn.

He added the joint development could be a win-win cooperation since Petronas
will gain more production and efficiency, while PTTEP will be able to
produce more petroleum products from gas blocks in Malaysia.

Mr Phongsthorn said PTTEP is ready for the incoming auction for the new
concession of the Bongkot field, which is due to expire in 2023.

The shareholders, who operate the Bongkot gas blocks that are due to join
the new auction, will remain the same. PTTEP holds 44.4%, Total E&P Thailand
holds 33.3% and Shell Integrated Gas Thailand Pte Ltd owns 22.2%, he added.

The new auction will also cover the Erawan gas blocks concession, operated
by Chevron Offshore Thailand, whose operation is due to expire in 2022.

Gas output from the Erawan gas block accounts for around 33% of total gas
production from the Gulf of Thailand, while the rest is from the Bongkot
blocks.

The terms of reference (ToR) for the auction are being drafted and the
actual bid is due to be held in the second half of this year before winners
are officially announced in February next year.

Mr Phongsthorn said having the same operators running the two expiring gas
blocks will benefit Thailand more than having newcomers take over, as
operations and production could be more stable if the blocks are continued
to be run by PTTEP and Chevron.

"It will take 3-5 years for the current operators [PTTEP and Chevron] to
move all equipment out and for the newcomers to move in their new
equipment," he said.

PTTEP shares closed on the Stock Exchange of Thailand yesterday at 90 baht,
down 1.50 baht, in heavy trade worth 1.1 billion baht.

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Link to Original Article:
http://www.bangkokpost.com/business/news/1260218/pttep-and-petronas-discuss-
joint-project

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com