Thai Petroleum Act: NLA to examine findings next week

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PETROLEUM ACT
NLA to examine findings next week
THE NATION

BANGKOK: -- THE NATIONAL Legislative Assembly's panel on energy will present the results of its study on issues arising from the enforcement of the Petroleum Act of 1971 to the NLA next Tuesday.

General Sakol Sajjanit, chairman of the committee, said yesterday it had also been examining problems with the Petroleum Income Tax Act of 1971.

The panel will hold a public hearing on Friday on the two acts before forwarding its report to the NLA so that it can amend the law related to petroleum energy and allow the 21st round of petroleum-exploration bidding to proceed, he said.

The bidding had to be delayed after a public outcry against it.

The government must learn to manage controversy, Sakol said.

"If the opponents of petroleum concessions honestly have different opinions, then it should not be a problem, unless they have a hidden agenda or some ulterior motive.

"The issues surrounding the 21st round of petroleum concessions must be eliminated within one year because it would take five years to explore and drill for oil before we can get the first drop," he said.

Concession system queried

His committee appointed three sub-panels to look at the issues and found that the current law had only a concession system to manage petroleum production.

The panels have looked into other systems such as production sharing, which would give the state a certain degree of control over operations and allow it to participate in petroleum production according to its ownership.

Under this formula, the government would have to set up a national oil corporation to oversee the business, similar to Malaysia's Petronas.

Another business model is production to order. The government would hire a company to produce petroleum.

The government would benefit the most under this format, according to the committee's findings.

Another system is joint investment by the public and private sectors.

This is the most favourable alternative, as it would reduce risks and the financial burden on the state, though each business format has its drawbacks and advantages, he added.

For production sharing, the government must provide adequate incentives to attract partners, since the world oil price has been falling. The government must also be ready in terms of technology, laws and organisations to support the business, said Air Chief Marshal Adisak Klansanoh, adviser to the panel.

"If the government decides to continue with the concession system, the public may not like it. Some information that has been kept confidential should be disclosed to the public so that the concessions can be continued. Some information that has been released to the public is true but some is distorted," he said.

The Energy Ministry is facing a crisis of faith because some members of the public do not believe the information presented by it, he said.

"The government must be aware of this issue and tackle the problem."

Source: http://www.nationmultimedia.com/politics/NLA-to-examine-findings-next-week-30259389.html


-- The Nation 2015-05-06

[Srikcir]

Of the four systems, concession is the simpliest, less risky, least costly, and most transparent should the government chose. As a net oil importer, Thailand would benefit best from a concession system which would largely remain intact with unexpected changes or shutdown in governments.

[Srikcir]

The concession system is the less risky, most transparent, least complex, best enforceable, and best suitable for a net oil importer. It is also least likely to be disturbed by any sudden changes or shutdown in the government. Given its simplicity, a concession system can be easily re-negotiated should the government's policies and/or market conditions change.