The government must have a clear direction in securing gas supply ahead of the expiry of gas concessions in the Gulf of Thailand in 2022, urge businesses, academics and energy policymakers.
Concessions for gas blocks in the Gulf of Thailand are held by Chevron (Thailand) Co and PTT Exploration and Production (PTTEP) Plc. The two have been producing gas from the resource blocks since 1981 and there is no clear direction from the government on the country's gas supply after the expiry.
Those gas blocks make up nearly half of Thailand's total gas supply, or around 3 billion standard cubic feet per day.
The first round of concession extensions happened in 2006-07 and cannot be further extended, according to the Petroleum Act of 1971. The government is considering whether to change the Act to allow concession extensions or open a new round of bidding.
Piyasvasti Amranand, head of the Fellowship of Energy Reform for Sustainability (ERS), said the fellowship was worried the unclear policy would discourage the two companies from producing at full capacity in order to avoid risks.
Lower natural gas supply would force power-generating units to switch to costly liquefied natural gas (LNG) for energy production.
The ERS comprises academics, business representatives and government employees involved with the energy sector. It formed in 2013 and now has more than 200 members.
According to Mr Piyasvasti the government has around six months to make a decision as it would take years to prepare the complicated legal paperwork needed for a new round of concessions.
He estimated that the government would have losses of up to 350 billion baht in state revenue and LNG import costs of up to 350 billion over the next five years if it did not take a clear stand ahead of the expiry.
"If we allow costly LNG to dominate as the major power resource, it would result in rising electricity bills, increasing by another 90 satang per kilowatt hour over the next five years ahead of the expiry of the concessions," he said.
Energy analyst Manoon Siriwan said the government should set up a wholly state-owned company to join ventures with PTTEP and Chevron if it wants to renew the concession.
"This process does not violate the Petroleum Act and the state could gain more revenue not only from taxes and royalty fees but also dividend payments from business operation," said Mr Manoon.
Tevin Vongvanich, chief executive and president of PTTEP, said the model for new gas production after concession expiry should be finalised this year in order to allow a period to prepare for signing contracts.
He said exploration and production firms would normally need five to six years to prepare for a new round of concessions. That leaves only the final half of this year for the government to make its decision, said Mr Tevin.