Thai official: Delay in oil bid 'a setback'

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Delay in oil bid 'a setback'
PRAPASRI OSATHANONT,
WATCHARAPONG THONGRUNG
THE NATION



BANGKOK: -- DELAYING THE 21st round of bidding for petroleum concessions would negatively affect investor confidence, a senior energy official said yesterday.

Kurujit Nakornthap, deputy permanent secretary of the Energy Ministry and a member of the energy reform committee of the National Reform Council (NRC), said the decision on whether Thailand should go ahead with the bidding now lay with the government and the Energy Ministry. "The committee's task has been completed. We undertook the study [on whether and/or how to commence the concession bidding] because the government had asked us for our opinion," he said.

A majority of NRC members on Tuesday disagreed with the energy reform committee's resolution to move ahead with the 21st bidding round in accordance with the present plan and to study a production-sharing system that is suited to the potential of the petroleum resources.

"There are 25 members of the energy reform committee, 22 of whom agreed with the opening of the 21st petroleum concession round, while three members reserved their opinion," he said.

The three minority members were Alongkorn Polaboot, Charnarong Yaowalert and Rosana Tositrakul.

Kurujit said that during the NRC's general deliberation session, most speakers had expressed support for the 21st round.

However, since the subsequent vote on the issue had come down on the other side, it is now up to the government to make a decision as to whether to follow the rationale of the majority of the committee members or the majority vote by the NRC, he said. A delay in the bidding round would negatively affect investor confidence, since the government had already announced that it would open the new round, he stressed.

Kurujit said the country had to import more than Bt1 trillion worth of energy sources a year, with crude oil accounting for 85 per cent of the imports and natural gas for the remainder.

Meanwhile, the power sector has to depend on natural gas for 70 per cent of its electricity generation, a figure that is increasing in contrast to the country's natural-gas reserves, which are declining.

Therefore, if the country cannot find additional reserves, it could face an energy crisis and waste money on importing other types of fuel, factors that would widely affect the economic and social systems, he said.

Deputy Prime Minister Wissanu Krea-ngam said he had an appointment with the NRC and 18 reform committee members today, at which he would discuss a wide array of topics, including whether there was any problem with the NRC's coordination with the government.

Under the interim constitution, the NRC can make a recommendation to the government, which will then consider whether or not to follow it, he added.

Alongkorn Polaboot, an NRC member and whip, said the reform council would submit the report about its voting on the petroleum-concession bid to Prime Minister General Prayut Chan-o-cha by the end of this week, as well as two other reports - one from the energy reform committee and the other from the committee on public participation and hearing of public opinion.

He said the government could choose high-potential fields such as the four offshore blocks adjacent to the Erawan and Bangkok fields in the Gulf of Thailand to undertake a production-sharing system, because the fields were currently run by Chevron and PTT Exploration and Production respectively.

Source: http://www.nationmultimedia.com/business/Delay-in-oil-bid-a-setback-30251908.html


-- The Nation 2015-01-15

[Don Aleman]

The last explorations indicated no substantial oil deposit and Thai bidding requirements too vague for anyone to show interest. Smart bidders on anything in Thailand would be very smart to just not bid. Thailand has never put anything out for bids specifying exactly what thet want, when, and what and when payment would be made. Often, when a bid is accepted, Thailand has changed the specs adding more then the originals contracted agreed upon.

[rickirs]

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The last explorations indicated no substantial oil deposit and Thai bidding requirements too vague for anyone to show interest. Smart bidders on anything in Thailand would be very smart to just not bid. Thailand has never put anything out for bids specifying exactly what thet want, when, and what and when payment would be made. Often, when a bid is accepted, Thailand has changed the specs adding more then the originals contracted agreed upon.

You might see state-owned China National Offshore Oil Corporation bid on the leases, if only to lock up the reserves from its neighbors and the West. Many such leases do not require immediate exploration so China would only be out of the initial cost of the lease. I'm sure Gen. Prayut would make every accomodation necessary to not disappoint China with its investment, especially if the Chinese were to offer a submarine as good faith. And maybe China can pay for the leases with yuans - that would work for both Thailand and China as they continue to become close trade partners.

[rickirs]

This "setback" is imaginary.

With current oil prices falling below $45 pbl and the average cost to extract and ship crude for refinery at a minimum $65-$80 pbl (and much higher for some oil producing countries in the Middle East and Africa), any successful bidder for the concessions will likely sit on those leases for at least five years before developing the reserves, assuming developable reserves can be verified.

The Junta-led government should delay the bidding until such time as the price of oil merits economic development of the reserves. But I fear that the government is tempted by the immediate revenues such leases will generate that can be used towards its never-ending agricultural subsidies to stall political protests. Thus far, the government has not shown economic discipline in making difficult decisions that affect the Thai economy and I wouldn't expect it to suddenly do so now.

[Thai at Heart]

This "setback" is imaginary.

With current oil prices falling below $45 pbl and the average cost to extract and ship crude for refinery at a minimum $65-$80 pbl (and much higher for some oil producing countries in the Middle East and Africa), any successful bidder for the concessions will likely sit on those leases for at least five years before developing the reserves, assuming developable reserves can be verified.

The Junta-led government should delay the bidding until such time as the price of oil merits economic development of the reserves. But I fear that the government is tempted by the immediate revenues such leases will generate that can be used towards its never-ending agricultural subsidies to stall political protests. Thus far, the government has not shown economic discipline in making difficult decisions that affect the Thai economy and I wouldn't expect it to suddenly do so now.

Since there is absolutely zero chance of any scrutiny, analysis or changes through the current political system, the current government shouldn't be negotiating anything of this magnitude.

As dodgy as politicians might be, juntas should not be negotiating long term leases of natural resources in this manner.

[Phil Water]

I really can't see any company outside of PTT or Chevron who has the experience and at these prices, having the capital already at work, gives both of them even more advantage. Of course new leases would involve farm in with PTT, but outside of Chevron, no one has shown much interest in long term development in these fields. Thailand's position of having to import half of their NG means that these fields will certainly be developed.