The Energy Ministry will proceed with the 21st round of bidding on concessions for oil and gas exploration and production, despite strong opposition from activists.
The Erawan natural gas field, operated by Chevron Thailand Exploration & Production Ltd. The company’s concession for the field, located in the Gulf of Thailand, has been extended to 2022 after expiring in 2012. CHANIKA SUKSOMJIT
Policymakers want to move forward on exploration of new resources, but a vocal group of activists remains strongly opposed to the bidding for fear of a lack of shared benefits with broader society.
The opposition has furiously lobbied members of the National Reform Council (NRC) to scrap the bidding round and force the ministry to amend the current concession contracts.
The activists favour a production-sharing contract (PSC) model to replace the current system that charges a progressive rate of royalty fees throughout the concession period and a 50% tax on corporate income.
Under the PSC system, the contract requires the awarded company to bear the entire cost of investment and production and the net profit is mostly shared with the government as the company takes a lesser cut.
The opposition group has gained strong support from the NRC, but the Energy Ministry can move its agenda forward by seeking cabinet approval.
Permanent secretary Areepong Bhoocha-oom insisted yesterday that the PSC model was better suited to countries with abundant resources and economies of scale to offset a company's lower profit sharing. He cited Malaysia, Indonesia and Myanmar as examples.
"But the fact is that Thailand has far less natural resources," Mr Areepong said.
He said the opposition group mistakenly believed that Thailand holds crude reserves on a par with giant players like Saudi Arabia.
The key point is that Thailand has done nothing to find new resources for nearly a decade, while demand for resources keeps growing every year.
"We can't put our energy security at such great risk," Mr Areepong said.
The Mineral Fuels Department is accepting bid proposals for the 21st round until Feb 18.
There are 29 blocks of offshore and onshore areas up for bid. The first three years will require an estimated 5 billion baht in investment.
Policymakers say the gas field under the Malaysia-Thailand Joint Development Area, where the concession uses the PSC system, has so far generated less benefit to Thailand than the system of progressive-rate royalty fees and 50% income tax.
At the end of 2014, Thailand's proven and probable reserves of petroleum gas and crude oil stood at 18.6 trillion cubic feet and 635 million barrels, respectively.
Those supplies could feed domestic demand for 14 years, according to government estimates.