No Need For 90-Day Oil Reserve: Ex-Energy Minister Piyasvasti

[webfact]

No need for 90-day oil reserve: ex-energy minister

Watcharapong Thongrung

The Nation

BANGKOK: -- The government's plan to increase the statutory oil reserve from the present 36 days of consumption to 90 days to deal with a possible energy crisis could unnecessarily burden the public, according to former energy minister Piyasvasti Amaranand.

He recently posted the comment on his Facebook page.

He said the public should keep a close watch on the plan, because of the expected high cost of storing oil and the cost of constructing depots. He is concerned that this cost might be passed to consumers.

Currently the government allows retailers to maintain the oil reserve, of which half is crude oil and half is finished oil products, to ensure national energy security. Therefore, in a possible worst-case scenario in which the country cannot procure any oil, it can be assured that it will have adequate oil reserves to be used for 36 days.

If a crisis prompts a 10-per-cent drop in the oil the country could procure, the supply would be sufficient for a year, taking into account the amount the country could still procure, plus the 36-day reserve amount.

Piyasvasti said, however, that the worst oil crisis on record saw a decline of global production of only 7 per cent, which lasted for three months, so he questioned why the country needs to extend the reserve period to 90 days. He doubted the plan to extend the reserve period would benefit anybody.

He also cited an article by Democrat MP Anik Amranand stating that to extend the reserve period to 90 days, the government would require land equivalent of 400 soccer fields in size, and would have to spend about Bt120 billion on the oil purchase. It would also face costs of maintaining oil inventories, depot rents and related interest totalling Bt14.367 billion per year. This would jack up the retail diesel and petrol price by 55 satang per litre.

Bangchak president Anusorn Sangnimnuan said he personally would prefer to see an extension to just 45 days to ensure national energy security, adding that Bangchak was ready to increase the oil reserve. He said 90 days would be too long, and would require heavy spending on oil depot fees and oil purchases. The government should carefully study what would be the most appropriate period for the reserve, he said.

Anusorn added that it seemed unnecessary to keep such a considerable amount of oil in reserve. If the country still has money, it can procure oil from anywhere, though at higher prices, he said.

In a related matter, Energy Ministry permanent secretary Norkun Sitthi-phong and his team flew to Japan on Sunday and will be there until Thursday studying strategic petroleum reserve strategy. The Department of Energy Business has been tasked to conduct a study on the matter and present the results to the ministry.

-- The Nation 2012-12-11

[fareastguy]

Quote: He said the public should keep a close watch on the plan, because of the expected high cost of storing oil and the cost of constructing depots. He is concerned that this cost might be passed to consumers.

It's a shame an ex-minister didn't say something similar about the rice pledging scam !!

[theblether]

He's right, it's an excessive reserve. 36 days is plenty, possibly even too much.

[Pib]

He said the public should keep a close watch on the plan, because of the expected high cost of storing oil and the cost of constructing depots. He is concerned that this cost might be passed to consumers.

Today I'm going to talk to a couple of motorcycle/taxi drivers, couple of housegirls/yardboys, Big C sales associates, some day laborers, and a couple of other folks in the general public to see how they are going to keep a close watch on the plan. I'm sure they will have high interest and good methods in keeping a watch on the plan.

[Ricardo]

Perhaps another way to boost Thailand's ability to withstand any possible supply-shortage, might be to develop more-efficiently Thailands' own onshore/offshore oil/gas-bearing fields ? Depending so much on imported oil, and Burmese gas, certainly could be risky whenever the global-economy starts to recover and expand again.

And don't forget to not-mention the reserves in the disputed-with-Cambodia offshore-areas !

[FarangTalk]

Perhaps another way to boost Thailand's ability to withstand any possible supply-shortage, might be to develop more-efficiently Thailands' own onshore/offshore oil/gas-bearing fields ? Depending so much on imported oil, and Burmese gas, certainly could be risky whenever the global-economy starts to recover and expand again.

And don't forget to not-mention the reserves in the disputed-with-Cambodia offshore-areas !

Thailand doesn't have that much natural resources in comparison with other countries. They have no option but to rely on imports, even when the disputed areas in the Gulf of Thailand start producing.

They do not have the resources nor the expertise to become more efficient, as they are entirely reliant on foreign companies and expertise to provide drilling, logistics and other services.

[geriatrickid]

He's right, it's an excessive reserve. 36 days is plenty, possibly even too much.

Sir, I hope your words do not come back to bite you on your delicate posterior.

Thailand does not have alternative fuel sources like countries that have smaller energy reserves.

A conflict in the middle east would devastate the international oil markets and Thailand would not be able to compete with countries that had the financial clout to buy up the available oil. Thailand requires a robust national reservoir. I just hope the depots are distributed around Thailand.

[Orac]

"He also cited an article by Democrat MP Anik Amranand"

Are The Nation not going to mention he is refering to his wife?

[Ricardo]

Perhaps another way to boost Thailand's ability to withstand any possible supply-shortage, might be to develop more-efficiently Thailands' own onshore/offshore oil/gas-bearing fields ? Depending so much on imported oil, and Burmese gas, certainly could be risky whenever the global-economy starts to recover and expand again.

And don't forget to not-mention the reserves in the disputed-with-Cambodia offshore-areas !

Thailand doesn't have that much natural resources in comparison with other countries. They have no option but to rely on imports, even when the disputed areas in the Gulf of Thailand start producing.

They do not have the resources nor the expertise to become more efficient, as they are entirely reliant on foreign companies and expertise to provide drilling, logistics and other services.

Agree that foreign expertise is required, but I do think there ought to be a more pro-active strategy of trying to bring it in, rather than treating it as a low-priority option. Wasn't there a recent thread, about delays in the next round of block-licensing, not being seen as a problem ?

I also recall ( a few years ago) foreign proposals to increase production/efficiency in the Fang-basin, and then use the proceeds of that, to be ploughed-back into further exploration/development, and which costed & well-argued proposals seemed to die-the-death ? That involved the Dept. of Defence Energy.

I suspect that, so long as oil/gas can be sourced at reasonable/affordable prices, the usual TiT lack-of-planning-ahead will continue.

Are there any TV-posters, who are involved in Thai oil/gas-exploration, who might feel able to give an expert-view, of whether search/development might be accelerated ?

Lastly if Thai companies don't have the expertise or resources, why do PTT keep getting involved, in overseas projects ?

[tragickingdom]

Let's see if the jolly joker aka former energy minister has the same opinion if the oil supply suddenly stops when the Middle East is in turmoil.

[Soutpeel]

Perhaps another way to boost Thailand's ability to withstand any possible supply-shortage, might be to develop more-efficiently Thailands' own onshore/offshore oil/gas-bearing fields ? Depending so much on imported oil, and Burmese gas, certainly could be risky whenever the global-economy starts to recover and expand again.

And don't forget to not-mention the reserves in the disputed-with-Cambodia offshore-areas !

Thailand doesn't have that much natural resources in comparison with other countries. They have no option but to rely on imports, even when the disputed areas in the Gulf of Thailand start producing.

They do not have the resources nor the expertise to become more efficient, as they are entirely reliant on foreign companies and expertise to provide drilling, logistics and other services.

Agree that foreign expertise is required, but I do think there ought to be a more pro-active strategy of trying to bring it in, rather than treating it as a low-priority option. Wasn't there a recent thread, about delays in the next round of block-licensing, not being seen as a problem ?

I also recall ( a few years ago) foreign proposals to increase production/efficiency in the Fang-basin, and then use the proceeds of that, to be ploughed-back into further exploration/development, and which costed & well-argued proposals seemed to die-the-death ? That involved the Dept. of Defence Energy.

I suspect that, so long as oil/gas can be sourced at reasonable/affordable prices, the usual TiT lack-of-planning-ahead will continue.

Are there any TV-posters, who are involved in Thai oil/gas-exploration, who might feel able to give an expert-view, of whether search/development might be accelerated ?

Lastly if Thai companies don't have the expertise or resources, why do PTT keep getting involved, in overseas projects ?

Foreign expertise is already in the gulf and Thailand...the problem you have is that the reservoirs are depleting and one suspects in next 10 -15 years large numbers of the existing fields are going to be marginal anyway..ie the tanks will just about be empty....all the current programs in the gulf are being undertaken to maintain productions levels to meet current demand.

Oil production in the gulf is minimal somewhere in the order 60-80k bpd..

As regards the disputed maritime area...what is actually there is anyones guess...is there oil & gas ? sure...how much now one knows just yet, how viable or how long the reserves would last is the million dollar question and as this is still a political hot potato...no oil company is going to get involved there until the "political differences" are sorted out between Cambodia and Thailand

In conclusion Thailand needs imported oil and Burmese gas and no amount of exploration/development in the gulf or on land is going to reduce that need significantly

As regards the TiT lack of forward planning...the forward planning is in place hence the reason Thailand is looking at commerical nuclear....

[ResX]

You have to consider profit that you can get by mean of hedging againt variation of 3-monthly oil price movement before deciding to go or not to go for 90-day storage strategy. The idea is to maximize purchase order when the price is low and to minimize it when the price is high. 36-day storage strategy is hardly useful to perform this advanced cost cutting measure. Then you can conclusively determine whether or not to adopt 90-day storage strategy.