Gas field resolution aimed for March

Collateral payment point of contention

The Energy Ministry expects to conclude a dispute on the decommissioning process for offshore gas platforms in the Erawan and Bongkot fields in March 2020, following the current concession operators’ refusal to pay for collateral worth a combined US$3 billion.

Permanent energy secretary Kulit Sombatsiri said the collateral payment is requested for removing platforms — 200 units worth $2 billion in the Erawan field and 100 units worth $1 billion in the Bongkot field.

These platforms will not be transferred to government ownership, so the operators have been asked to pay for the decommissioning expense.

The concessions for the gas blocks will expire in 2022 and 2023. US Chevron is the main operator for the Erawan gas field, which has Moeko Co as a shareholder.

For the Bongkot field, PTT Exploration and Production (PTTEP) holds the concession contract together with France’s Total.

Chevron, Moeko and Total are required to pay the collateral for decommissioning, while PTTEP will operate both gas fields from 202223 onward.

“The collateral payment procedure follows the Ministerial Regulation Prescribing Plans and Estimated Costs and Security for Decommissioning of Installations Used in the Petroleum Industry of 2016,” said Mr Kulit.

“The Mineral Fuels Department sent letters to current operators on June 13, with a grace period of 120 days, so the full payment will be due on Oct 11.”

He said the current operators submitted letters objecting to the collateral payment in mid-September to the department.

The ministry will take roughly 180 days to consider their objections.

“The ministry is confident a decision will be made by agreement among public and private counterparts. The government will listen to opinions and act under the related petroleum laws,” said Mr Kulit.

“If both parties cannot come to a common agreement, the next step is legal action for an arbitration procedure.”

He said the current operators have argued this ministerial regulation is unfair and the collateral payment should apply only to gas platforms that need to be decommissioned.

Some platforms will be transferred to PTTEP and Mubadala as new operators, so the collateral should not be paid in full, they argued.

“The department will also determine how many gas platforms will be removed by December, possibly reconsidering the collateral amount,” said Mr Kulit.

The Erawan and Bongkot fields, located in the Gulf of Thailand, produce 2,000 million standard cubic feet per day of natural gas, some 50% of the country’s natural gas demand.

Natural gas is used in power generation, industrial manufacturing processes and transport.

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The ministry is confident a decision will be made by agreement among public and private counterparts.

KULIT SOMBATSIRI Permanent energy secretary