Thailand risks facing serious LNG shortage – Eppo cites worst-case scenario of 9m tonnes

The Erawan natural gas field, operated by Chevron Thailand Exploration & Production Ltd. The company's concession for the field , located in the Gulf of Thailand, has been extended to 2022 after expiring in 2012.

The Erawan natural gas field, operated by Chevron Thailand Exploration & Production Ltd. The company’s concession for the field , located in the Gulf of Thailand, has been extended to 2022 after expiring in 2012.

 

Thailand is at risk of being short of 6,300 megawatts of electricity in 2021 due to the possible disruption of up to 9 million tonnes of liquefied natural gas (LNG) stemming from the lack of further investment in the Erawan and Bongkot gas fields.

Production concessions for the two blocks — Bongkot, operated by PTTEP, and Erawan, operated by Chevron — are due to expire in 2022-23, according to the Energy Policy and Planning Office (Eppo).

Production is depleting ahead of the end of the concessions as the two operators are unlikely to invest more, forcing Thailand to increasingly rely on imported LNG to get sufficient gas for the power-generating sector.

However, the limited storing capacity of the country’s LNG terminals of 11 million tonnes a year, while demand stands at around 20 million tonnes, means that Thailand could face a 9-million-tonne shortage of LNG, said Eppo’s director-general Prasert Sinsukprasert.

Speaking at a seminar organised by the Economic Reporters Association, Mr Prasert said 9 million tonnes would be the worst-case scenario if the winners of the new round of concessions were not the previous operators. This means the new investors will have to spend a longer period of time investing in facilities before starting production.

In late May, the National Energy Policy Council (NEPC), chaired by Prime Minister Prayut Chan-o-cha, decided to open new bids for the two gas blocks.

The auction will open in the second half of this year at the earliest after a revised version of the Petroleum Act is passed by the National Legislative Assembly. The Energy Ministry said the winners will be announced publicly by mid-2017.

Currently PTT, the country’s oil and gas conglomerate, operates the LNG receiving terminal located in Map Ta Phut with a capacity of 5 million tonnes per annum (MTPA) and is constructing the second phase, which will help increase storing capacity by 5 MTPA in 2017.

It also plans to build a new terminal with a capacity of 1.5 MTPA in 2019 in order to tackle the problem of limited storing capacity.

Mr Prasert said the NEPC also approved the construction of a second LNG terminal in Rayong with a capacity of 5-7.5 MTPA, which is expected to start operation in 2022.

“During the time when the construction of the new terminals has yet to be completed, we will be short of 5 million tonnes of LNG in 2018 and 6 million tonnes in 2019 and 2020, while 9 million tonnes is the worst-case scenario,” said Mr Prasert.

During the period of LNG shortage, the government would have to encourage people to consume less energy via several power-saving campaigns as well as increase power-generating capacity from other sources such as coal and renewable energy.

However, the two coal-fired power plants that are due to be constructed in the South face delays since the projects are strongly opposed by local communities.

Auttapol Rerkpiboon, PTT’s senior executive vice-president overseeing oil business, said petroleum sources in the two blocks are small and scattered, making it harder for the company to explore and produce gas and petroleum from the blocks.

Mr Auttapol said falling LNG production would have an adverse impact on downstream industries as producers must rely more on expensive imported LNG.

Source: http://www.bangkokpost.com/news/general/1017485/thailand-risks-facing-serious-lng-shortage