E&P players pass auction qualifier

Sept 25 bid deadline for five companies

As expected, all five exploration and production (E&P) companies have passed the pre-qualification process for the new Erawan and Bongkot gas block auction, says the Mineral Fuels Department.

Veerasak Pungrassamee, director-general of the department, said it has approved all five companies — Chevron, PTTEP, Total, Mubadala and OMV — as they passed all auction conditions: finances, capability, technical skill and business portfolio.

Chevron, PTTEP and Total operate two gas blocks, while Mubadala and OMV are newcomers.

Mr Veerasak said the five investors can access data related to the Erawan (G1/61) and Bongkot (G2/61) blocks from May 30 to June 1, and study it in the data room from June 7 to Sept 21. Investors must place a collateral of 7 million baht per gas block to access the data.

“The department set Sept 25 as a deadline for investors to submit their bid proposals and will hold a screening period from September to November. The winning bidders should be announced in December this year,” he said.

Moreover, the department will team up with the Industry Ministry to hold a seminar titled “Leader Conference” on June 4 to offer related information about two gas blocks.

Mr Veerasak said qualified candidates must have experience in petroleum E&P in the sea of at least 100 million standard cubic feet per day (MMSCFD), as well as paid-up capital from the parent firm of at least US$4 billion (128 billion baht) for Erawan and $2 billion for Bongkot.

Energy policymakers have outlined crucial criteria for the upcoming auctions, with offered gas price to PTT making up 65% of the decision, while 25% will be weighted to state benefits under production-sharing contracts, which should not be less than 50%.

Another 10% will gauge other conditions such as special benefits and bonuses, including hiring Thais for 80% of the workforce in the first year of operation and up to 90% at the end of fifth year.

Mr Veerasak said a fluctuation of one baht of the natural gas price per million British thermal units (Btu) could impact the fuel tariff rate by five satang per kilowatt-hour on consumers’ power bills, so policymakers have to ensure that gas prices from this auction round will not be higher than the current rate and there will be no impact on people’s power bills.

As of February, the average gas price from Erawan was 160 baht per million Btu and Bongkot was 200 baht per million Btu.

The two blocks produce a combined average of 2,110 MMSCFD, accounting for up to 75% of gas production in the Gulf of Thailand. The current concessions for Erawan and Bongkot will expire in April 2022 and March 2023, respectively.

The two blocks have been operational for 40 years.

Mr Veerasak said the department will open the Round 21 concession for investors once it announces the wining bidders.