Petroleum exploration bidding to resume

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ENERGY AUCTION
Petroleum exploration bidding to resume
WATCHARAPONG THONGRUNG
THE NATION

BANGKOK: -- THAILAND will finally kick off the 21st round of bidding for domestic petroleum exploration and production next month after Prime Minister Prayut Chan-o-cha ordered a three-month delay for the National Legislative Assembly (NLA) to amend the petroleum laws.

Puangthip Silpasart, director-general of the Mineral Fuels Department, said yesterday that the auction would still be for 29 blocks but the phrase "petroleum concessions" would no long be used.

The three high-potential blocks in the Gulf of Thailand - G3, G5 and G6 - will be governed by a production-sharing scheme, while the remaining onshore and offshore blocks will come under concessions, she said.

The department has sent officials to work with the NLA on drafting the production-sharing law and to present information on why the country needs to speed up its opening of the new petroleum E&P round.

The department says it has engaged a credible consulting firm to appraise the country's petroleum reserves and show the NLA that proven gas reserves will be depleted in six to seven years.

Consumption of natural gas has grown to 5.2 billion cubic feet per day against domestic supply of only 3bcfd.

The country has to import 1.1bcfd from Myanmar and 0.8bcfd from the Thailand-Malaysia Joint Development Area. It also buys liquefied natural gas equivalent to 0.28bcfd from abroad.

Gas demand to rise

Gas demand is expected to rise to more than 5.2bcfd by 2018, so new local gas sources must be to found to avoid increasing dependence on imported LNG.

A committee chaired by Kurujit Nakornthap, deputy permanent secretary of the Energy Ministry, is considering a suitable way to manage the two petroleum concessions set to expire from 2022-23.

The committee is expected to reach a conclusion this year based on two guiding principles - continued flow of petroleum and maximum benefit for the country.

An Energy Ministry source said the ministry planned to send out bidding invitations next month, since the NLA was expected to finish its amendment in the three-month period declared by the prime minister in March.

If the NLA cannot finish in time, Prayut may have to resort to Article 44 of the provisional constitution to allow the government to proceed with the petroleum tender.

Rosana Tositrakul, an NLA member and key opponent to the petroleum bidding, said the public was not against petroleum E&P activities but thought the procedures should come under transparent laws and regulation.

The department should wait for the NLA to complete its amendment of petroleum laws that will open the way for either production-sharing or contractual schemes, instead of the current laws that allow only concessionary schemes.

A citizens group is also drafting its own law, which will be completed this month, in parallel with the NLA.

"The NLA should wait to see the citizens' draft [before it makes] its decision," Rosana said.

Source: http://www.nationmultimedia.com/business/Petroleum-exploration-bidding-to-resume-30259311.html


-- The Nation 2015-05-05

[Srikcir]

"why the country needs to speed up its opening of the new petroleum E&P round."

Because the Junta government is running out of money as it continues its ineptitude in managing the economy. A new flood of cash from the sale of the new concessions will help cover its problems. The Junta could care less whether a PSA or Concession method is used to generate future revenues; it needs a financial injection now.

[NanLaew]

So most offshore blocks and all onshore blocks will no longer be called concessions... but will still be under the concessions structure. Maybe something lost in the translation?

But interesting to see that they are embracing the PSC model which has been very successful in neighboring oil domains, namely Vietnam and Indonesia, for some of the more attractive offshore blocks. There's already some offshore exploration planning going on for Q1/2 2016 Gulf of Thailand so they really need to have the new laws and structure in place. If the PSC's attract more/new money, hopefully they will be rolled out on the more prospective onshore concessions But I think there are too many vested interests involved onshore and they will need a lot more than three months to sort out that lot.

Edited May 5, 2015 by NanLaew

[Cardiff1963]

"why the country needs to speed up its opening of the new petroleum E&P round."

Because the Junta government is running out of money as it continues its ineptitude in managing the economy. A new flood of cash from the sale of the new concessions will help cover its problems. The Junta could care less whether a PSA or Concession method is used to generate future revenues; it needs a financial injection now.

Explain to me how exploration differs anywhere else in the world

[rametindallas]

It will take years to develop and produce these resources. Right now, energy prices are low but you can't depend on them to stay low forever. Investing in the future of less reliance on imports will strengthen Thailand's economy because industry runs on fuel. Expanding solar and wind in parallel is equally important as Thailand will, most likely, always be a net importer of energy (it buys a lot of hydroelectric electricity from Laos and Cambodia). There are no undeveloped hydroelectric sites left in Thailand. Using the tidal flow on the lower Chao Praya River may, in the future, become economical to develop.

[eeeya]

It will take years to develop and produce these resources. Right now, energy prices are low but you can't depend on them to stay low forever. Investing in the future of less reliance on imports will strengthen Thailand's economy because industry runs on fuel. Expanding solar and wind in parallel is equally important as Thailand will, most likely, always be a net importer of energy (it buys a lot of hydroelectric electricity from Laos and Cambodia). There are no undeveloped hydroelectric sites left in Thailand. Using the tidal flow on the lower Chao Praya River may, in the future, become economical to develop.

not really years.. we just completed 21 wells in 4 months in the GOT.

Thailand needs these new leases to become available or it will have to increase imports to meet demand.

[impulse]

not really years.. we just completed 21 wells in 4 months in the GOT.

Thailand needs these new leases to become available or it will have to increase imports to meet demand.

First there's permitting to do seismic, then there's seismic, then more permitting, then exploration drilling, then more permitting, then building and installing a platform and development drilling.

In the meantime, new build platforms are a year to deliver and even MOPU conversions are 6-12 months (minimum).

Sure, you can drill and complete 21 wells in a few months, if they're part of an existing Production Area. But the prep work started years ago.

It will be years before any new offshore concessions are brought online. Just the EIA's and permitting process will take that long. And that's if there's no green groups objecting.

(Edit: In fairness, there are a few -very few- entities already operating in GOT that could shave some time off if they retask existing MOPUs that have reached their economic limit where they sit in GOT, but timing is still doubtful because of the EIAs and permitting process and resistance by a lot of local groups)

Edited May 6, 2015 by impulse