Chevron exit negotiations set

The Energy Ministry will negotiate with US energy company Chevron to decommission offshore gas platforms in the Erawan field to avoid arbitration.

Permanent energy secretary Kulit Sombatsiri said the ministry ordered the Mineral Fuels Department to talk with Chevron last week after the company temporarily suspended plans to seek arbitration to allow more time for talks with the government.

The department is requiring Chevron to pay for all decommissioning costs, about US$2.5 billion (76.4 billion baht), for digging and drilling platforms in the Gulf of Thailand.

In June the department notified Chevron and Siam Moeco about the 100-billion-baht collateral payment, covering 300 platforms in the Erawan field.

In 2016, the ministry issued a ministerial regulation for decommissioning and collateral expenses to be allocated for two years before the auctions take place.

Chevron objected, saying the new regulation would not cover concessions before 2016 and it planned to initiate arbitration against the new regulation.

Chevron has a concession to operate the Erawan gas field that expires in April 2022, when the operations are to be handed over to PTT Exploration and Production (PTTEP).

Mr Kulit said shareholders in the Erawan block submitted new information about demolishing expenses, and negotiations should start very soon.

“The process will take time to reach a final conclusion, but it will not affect the schedule of transition operations for PTTEP,” he said.

PTTEP won two bids for the Erawan and Bongkot gas fields.

“The arbitration will proceed if the negotiation does not lead to an agreement,” said Mr Kulit.

Pairoj Kaweeyanun, president of the local unit of Chevron Thailand Exploration and Production, said Chevron is ready to negotiate with the government and is not worried about the transfer.

Energy Minister Sontirat Sontijirawong said Chevron’s decision to negotiate is an indicator that the two sides can work together to resolve the dispute and ensure transfer and operations for this gas field.

Chanamas Sasnanand, senior vicepresident for the finance division of PTTEP, said the collateral and decommission budget has been allotted at roughly $600-700 million, based on equity ownership in the Bongkot field.

PTTEP owns a 66.67% stake in the Bongkot field, with 33.33% belonging to Total under the current concession, ending in 2022-23.

PTTEP holds just 5% of Erawan. PTTEP plans to enter the Erawan block before the official transfer to ensure uninterrupted gas production.

‘‘ The arbitration will proceed if the negotiation does not lead to an agreement. KULIT SOMBATSIRI Permanent energy secretary