Bidding on big gas fields pushed back

Bidding on big gas fields pushed back

The image shows the Bongkot gas field in the Gulf of Thailand. (Photo courtesy of PTT Exploration and Production)
The image shows the Bongkot gas field in the Gulf of Thailand. (Photo courtesy of PTT Exploration and Production)

Bidding on new concessions for the Erawan and Bongkot petroleum blocks is expected to open by the second quarter of next year, says energy permanent secretary Areepong Bhoocha-oom.

The Mineral Fuels Department had previously aimed for the new auction of the gas fields to take place in the first quarter of 2017.

The concession for the Erawan block (B10-B13), now operated by Chevron Offshore Exploration and Production, is scheduled to expire in 2022. The concession for the Bongkot block (B15-B17), operated by PTT Exploration and Production Plc, is set to expire in 2023.

Concessions for the two gas blocks had expired after 20 years of operations, but were renewed for an additional 10 years to 2022-23.

In line with the Petroleum Act of 1969, however, the concessions cannot be renewed for a second time, compelling the government to open bidding for the blocks.

When the auction kicks off in June of next year, the Petroleum Committee, which is tasked with overseeing the process, is expected to spend a significant amount of time reviewing each applicants' proposal. Bidding results are expected to be announced by Sept 2017.

Before bidding gets under way, the Petroleum Committee will decide whether to use the concession system, the production sharing contract (PSC) system or a service contract (SC) system as the business model.

The principles and conditions for the auction are expected to be finalised by December after an appraisal of the costs for decommissioning the petroleum rigs.

Mr Areepong said the decommissioning cost is an estimated US$7 billion.

Meanwhile, amended versions of the Petroleum Act and the Petroleum Income Tax Act are expected to be ratified by the National Legislative Assembly and implemented by this October.

The two acts will help provide a clearer picture on the tax to be imposed on exploration and production firms operating under the new concession.

The Erawan block now produces an average of 1,240 million standard cubic feet per day (MMSCFD) of gas, while the Bongkot block produces 840 MMSCFD. The country's daily gas demand, by contrast, is 4,300 MMSCFD.

Mr Areepong said that after the auction for the Erawan and Bongkot blocks, moving ahead with the 21st round of bidding for concessions for oil and gas exploration will be the next challenge.

The 21st round of petroleum licence bids has been delayed since 2007 due to strong opposition from civic groups.

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