Jump-start for oil and gas bids on tap

Jump-start for oil and gas bids on tap

Energy Ministry forges ahead after setbacks

Energy officials  hope to start the  21st bidding round  for oil and gas  exploration before  the first half of  this year is up,  following a delay  of three months.
Energy officials hope to start the 21st bidding round for oil and gas exploration before the first half of this year is up, following a delay of three months.

The Energy Ministry plans to proceed with the 21st round of bidding on concessions for oil and gas exploration immediately after the end of the three-month postponement that started in late February.

The government must continue with the plan to secure energy for the country since it has been delayed for nearly eight months, Energy Minister Narongchai Akrasanee said.

For the 21st round, the government opened bidding to private firms to apply for licences from October-February.

But no firms applied due to strong opposition from non-governmental organisations (NGOs) and civic groups, forcing Prime Minister Prayut Chan-o-cha to order a three-month postponement until the relevant laws and regulations were amended.

"It was like we [the Energy Ministry] failed the examination," Mr Narongchai said.

"It was a setback that dragged us away from success, as we should have started exploring months ago. This is like going back to the beginning."

He said his ministry was due to resume the 21st round before the second half of this year.

Prominent NGOs have asked the government to change the licence-granting system from a concession model to one of production-sharing contracts (PSCs), which would require the National Legislative Assembly (NLA) to amend the Petroleum Act of 1971.

The NLA has yet to decide whether to change the system from concessions to PSCs, and the postponement period will end late next month.

Under the current concession scheme, known as Thailand Three Plus, the state receives more than 70% of concessionaires' profits, plus royalties, income tax and additional annual fees. Ownership of resources rests in the hands of concessionaires until the concessions end.

Under the PSC system, ownership of resources remains with the state, which holds the rights to manage resources and contracts.

The government receives royalties, agreed profit-sharing and income tax but also must bear the costs of equipment and exploration.

Speaking at a press conference to announce the Energy Ministry's six-month performance, Mr Narongchai said his ministry had succeeded in restructuring energy prices, terminating price distortion and cutting off universal subsidies for diesel and cooking gas.

Energy policymakers will start adjusting prices for compressed natural gas (CNG) in the second half to let them move in line with global prices and reflect real costs, he said.

The price of retail CNG is currently pegged at 13 baht a kilogramme, slightly below the real production cost of 15-16 baht.

The CNG price adjustment was delayed because the country's sole CNG seller, national oil and gas conglomerate PTT Plc, failed to provide the gas promptly, as its pumps fell short of demand, forcing motorists to queue up for hours at a time.

Disgruntled motorists, mostly truck drivers, asked the government to postpone the price adjustment to help get them through the queuing period.

PTT plans to set up more CNG pumps to prepare for the upcoming gas price restructuring.

Policymakers also intend to revamp conditions and regulations to pave the way for expansion of renewable energy over the next decade.

Last year, renewable power plants with combined generation of 1,000 megawatts failed to develop due to redundant regulations and insufficient transmission lines.

Under the new power development plan, renewables are expected to generate an additional 12,355 MW by the end of 2026, up from the current 7,280 MW.

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