Initial gas block bid terms set
Parties must commit to a certain quantity
The Thai government has outlined an initial requirement for Petroleum exploration and production (E&P) companies that want to join the bidding for the new concession of the Erawan and Bongkot gas blocks in the Gulf of Thailand, due by the end of this year.
Veerasak Pungrasamee, director-general of the Mineral Fuels Department, said international E&P companies that want to join in the bidding need to commit to producing a certain quantity of gas.
He said the exact amount for this round has yet to be finalised and will be announced later in July, when the bidding process is due to start.
But the committed amount is unlikely to be lower than that outlined under the previous petroleum law, which required at least 1,500 million standard cubic feet per day (MMSCFD).
Mr Veerasak said eligible E&P companies should be international firms with strong experience in managing petroleum resources.
The bidding will get underway with a qualification screening process, which is due to take place in the second half of the year, while the actual auction will be conducted in December, as previously planned.
The process can only move forward after the controversial Petroleum Act, which is due to be approved by the National Legislative Assembly, comes into effect this month.
Under the new Petroleum Act, two business models can theoretically be applied for the upcoming concession round — the existing concession system and the new production sharing system.
The Energy Ministry’s focus group committee will conduct a study soon on which business model should be applied for the upcoming auction.
Members of the focus group committee include representatives from PTT Exploration and Production (PTTEP) and Chevron Thailand Exploration and Production Ltd, which have been operating the Bongkot and Erawan gas blocks, respectively, as well as academics.
But despite the upcoming auction, gas production from the two gas blocks will remain at a relatively low level.
This is largely due to the production halt that will occur during the end of the concession period, from 2021-23, when the existing E&P firms — PTTEP and Chevron — will abstain from drilling new wells until clear business signals are given on the matter.
As a result, the combined gas production from the two blocks will remain at 2,160 MMSCFD from 2021-23, of which 1,280 MMSCFD will come from the Erawan block, Mr Veerasak said.
Afterwards, gas production is due to raise substantially from 2024-27, he said.
During the lull period in gas production, PTT Plc, the national oil and gas conglomerate, has been instructed to facilitate more imports of liquefied natural gas to offset the reduction in gas supply.
Meanwhile, a source at the Energy Ministry said there are E&P firms from the Middle East and China that have expressed interest in joining the bidding and are seeking local partners to that end.
Chaiwat Kovavisarach, president and chief executive of SET-listed and mostly state-owned Bangchak Petroleum Plc, said BCP will not join in the bidding for the two resources.