Thai energy: PTT plants may be hit by dwindling gas supply

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ENERGY
PTT plants may be hit by dwindling gas supply
Pichaya Changsorn
The Nation

BANGKOK: -- LOWER natural-gas production from the Gulf of Thailand will lead to below-capacity utilisation of PTT's gas-separation plants unless the country can find additional domestic gas resources, including from the Thailand-Cambodia overlapping claims area in the gulf.

In his keynote address to the World National Oil Companies Congress Asia in Bangkok yesterday, titled "Thailand's Gas Supply and Its Challenges", Nuttachat Charuchinda, chief operating officer for upstream business of PTT, said the country could not hinge its future alone on imported liquefied natural gas (LNG). Its prices fluctuate along with the world's market prices, and at its higher levels, this could double electricity tariffs in Thailand if the country cannot secure additional domestic supplies from the gulf.

"When I say 'gulf', I'm including gas lying under the overlapping [claims] area of Thailand and Cambodia. We know there are resources out there, but there are issues to be solved for the benefit of the two countries," he said.

This is because, unlike natural gas from Myanmar and LNG sources, that produced from the gulf is so-called rich gas that can be used as feedstock for the petrochemical industry and for cooking, Nuttachat explained.

"So when domestic gas is deplete, that means we can't run gas-separation plants at full capacity. Feedstock for the petrochemical industry will also drop. Nevertheless, it will take some time to reach a settlement on the overlapping claims," he said.

Negotiations between Thailand and Cambodia over the overlapping claims area that covers more than 27,000 square kilometres in the Gulf of Thailand have been delayed for decades. Both countries have awarded conditional exploration and production licences but there has been no exploration activity since 1974.

At the conference, Nuttachat outlined four key challenges facing Thailand's gas-supply sector. First is its high reliance on "cheap natural gas" from fields in the Gulf of Thailand, which after more than 30 years of production have reached maturity and are starting to decline this year.

"Erawan, the first field, has been produced for 32 years. Its concession will expire in the next seven or eight years, but there is no clear direction from the government of what they are going to do," he said.

The power sector has also been relying too much on natural gas, which fuels 70 per cent of electricity generation in the country. The government has tried to promote renewable sources, nuclear and coal for power generation, but the task is not easy. Renewable energy still accounts for a tiny proportion of power generation, and it remains unknown if coal-fired and nuclear power projects will get support from the public.

The second challenge is to strengthen the infrastructure for the gas-supply sector. In this regard, PTT is building its fourth gas pipeline and is planning a fifth, is doubling the capacity of its LNG receiving terminal to 10 million tonnes, and is considering building floating storage and regasification units (FSRUs) in Dawei, Myanmar, to strengthen the supply of gas from the western neighbour, and in the Gulf of Thailand to supply gas to the Chana and Khanom power plants.

Third is the heavy energy price subsidies, especially on liquefied petroleum gas, under governments' populist policies.

Fourth is the government's plan to create more players in the gas-supply industry, through allowing third- party access" to PTT's pipeline network.

"But the challenge is, who will look after the security of supply? Who will serve as a swing player [when there is a supply gap]? Who will invest in a new pipeline when needed?" Nuttachat said.

It is still not known what mechanism the government will use to replace the "pool price" system that PTT has applied for its gas-price formula when it introduces the third-party access to new suppliers.

"Probably, it will allow power producers to buy gas at different prices [from various sources]. But there will be a feed-in-tariff mechanism, and government will subsidise at that point instead," he said.

PTT currently sets a single price for its natural gas, through averaging the cost of gas it sourced from different fields.

These consist of Gulf of Thailand gas that costs about US$8 per million British thermal units, $11-$12 for Myanmar gas, and imported LNG, which could swing up to $18, Nuttachat said.

Pailin Chuchottaworn, chief executive of PTT, told the conference he believed the "gas-based economy" or the "golden era of gas" was upcoming, thanks to a growing use of gas in Asia and its quest for clean energy.

The PTT chief pointed to three petrochemical products he thought would become the "holy grails" of the petrochemical industry, namely polyurethane because of its versatile usability, fibre-reinforced plastic that can replace steel in car manufacture, and bio-plastics that conform to the environmentally friendly age.

Source: http://www.nationmultimedia.com/business/PTT-plants-may-be-hit-by-dwindling-gas-supply-30247175.html


-- The Nation 2014-11-07

[Phil Water]

Thailand seems well ahead of most the rest of the world in it's use of gas instead of coal for power generation. I hope that they are not forced to take a step back. I have heard of many coal fired plat proposals in Thailand recently. Lets hope that they can find a way to settle claim disputes with Cambodia before it comes to this.

Compared with coal, natural gas produces half the carbon dioxide, less than a third of the nitrogen oxide and just one per cent of the sulphur dioxide, with virtually no particulates.

[smedly]

why is the area disputed, draw a straight line south from the border point at the coast

[Soutpeel]

why is the area disputed, draw a straight line south from the border point at the coast

Not as simple as that due to the size/shape of the gulf, bordering countries, the normal international rules for demarcating maritime boundaries cant be applied

ie claim based on extension of the continental shelf or the 200 nautical mile limit

The only way forward on this is agreement/ joint areas in the disputed areas.

even international arbitration will not help, as all countries bordering the Gulf of Thailand have very valid and legal claims to the water in various parts.

[allan michaud]

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why is the area disputed, draw a straight line south from the border point at the coast

Not as simple as that due to the size/shape of the gulf, bordering countries, the normal international rules for demarcating maritime boundaries cant be applied

ie claim based on extension of the continental shelf or the 200 nautical mile limit

The only way forward on this is agreement/ joint areas in the disputed areas.

even international arbitration will not help, as all countries bordering the Gulf of Thailand have very valid and legal claims to the water in various parts.

And of course there is the point that these idiots would rather fight and argue over 4.5 soccer pitches of land at Preah Vihear for decades, so what hope is there when it comes to real resources?

[rickirs]

So if the government goes forward with its 2015 budget plans to purchase 489 NGV buses in the first quarter of next year, it may not have sufficient domestic natural gas supplies to run them? But with the assistance of Thai spicy foods, maybe they could be converted to run on fart (methane) gas. Now that is what I would call an alternative energy fuel strategy.

[maidee]

thailand cannot import from their friends in quatar?

the gas for rotten rice scam, sorry, sceme

[JacChang]

The question is, should I increase my shares in PTT or...?