New round of fuel concession bids should go ahead: NRC panel

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New round of fuel concession bids should go ahead: NRC panel
Prapasri Osathanon
The Nation

BANGKOK: -- The National Reform Council's committee on energy reform agreed yesterday that the Ministry of Energy should go ahead with its 21st round of bids for fuel concessions with the "Thailand 3 plus" system.

It said the ministry should also prepare for a production sharing scheme.

The NRC voted 149-44 in favour of the move, with 35 abstaining and one person refusing to vote to approve the study by energy reform and public participation panels.

The decision will be forwarded to the government for further consideration.

"The committee has resolved to choose the third choice by considering the highest benefit to the country and its people.

"It will submit the resolution to the NRC, which will forward it to the Cabinet afterward, NRC committee on energy reform chairman Thongchat Hongladaromp said.

The option chosen was one of three studied by the panel. The other two were: first, for the ministry to proceed with it current plan to open the 21st round of bidding to allow oil companies to explore for oil and gas under its Thailand 3 plus regime.

The other option was to abort the concession system in the 21st round, and replace it with a production sharing contract.

Vice chairman of the energy reform committee Kurujit Nakornthap said the 21st round of bidding was necessary because the country needs to find new fuel resources to make up for declining reserves of natural gas in existing fields as demand for energy has risen every year. Natural gas reserves would be sufficient to serve the country's needs for only another seven years, if there is no further exploration.

He said 'Thailand 3 plus' was a suitable system for the country because it would collect income from explorers based on the volume of production. Benefits also include high technology transfer, employment and energy security.

'Valuable ideas not considered'

Rosana Tositrakul, a leading member of the National Reform Council, said that the study had not taken valuable ideas from minority groups or outsiders into its consideration.

Rosana said the concession system favoured the private

sector, while individuals would shoulder more burden.

"In my personal view, I think that the 21st round of bidding for fuel concessions is related to the country's energy reform process as petroleum energy is one of the country's important natural resources.

Giving out a 21st round of bid concessions will tie the country to this for the next 29 to 39 years, including up to nine years of exploration," she said.

Rosana said she agreed with the production sharing system, saying that energy security should not be controlled by the private sector, but by the government as well.

Source: http://www.nationmultimedia.com/business/New-round-of-fuel-concession-bids-should-go-ahead--30251871.html


-- The Nation 2015-01-14

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" energy security should not be controlled by the private sector, but by the government as well."

There is no such thing as a nation's energy security being owned by the private sector.

With any nation the "control by the private sector" relates to private ownership of machinery, equipment, and facilities used in the exploration, development, and delivery of energy resources. Access and sale of energy resources is done through State-issued licenses, just like TV and radio broadcasting. The State at all times owns both proven and unproven energy reserves within its sovereign territory.

Thus, private ownership of a nation's energy sources is a legal illusion. More so when the government is not democratically-elected, such as an oligarchy in the form of a dictatorship or absolute monarchy. Venzuela and Russia have shown the State has the ability at any time to effortlessly dilute or expel private ownership, albeit through "national security" powers. Thailand is under martial law and controlled by a military junta that has absolute power over the nation's legislative and judicial systems. Private investors have no recourse to prevent Thai nationalization of their energy investments.

The advantage to the State for private ownership is that 100% of the risk for exploration, development, and delivery is born by private enterprise. In the event of a natural or an environmental disaster the entire cost is born by private enterprise. However, even those activities are controlled by government regulations. Being profit motivated, private enterprise is motivated by economic efficiency that may establish methods and procedures superior than imposed by the State. The State needs only minimal bureaucracy to monitor and inspect operations for federal compliance. The State is not affected by fluctuating energy prices. There is more State transparency given minimal conflict of interests.

Shared or participatory investment by the State can gain the State a larger share of the profits. Some countries have even demanded private enterprises receive no profits. However, direct State involvement requires a more complex bureaucracy AND capital investment. That capital investment is at risk as well as sharing liability for resource operations. The State is at risk for fluctuating energy prices. There is less State transparency given conflicts of interest.