Five to bid on gas blocks

Five to bid on gas blocks

Four firms seek action in both gulf fields

Five petroleum exploration and production (E&P) giants confirmed their participation in this year's auction of the Erawan and Bongkot gas blocks in the Gulf of Thailand by submitting their intention-of-auction documents to the Mineral Fuels Department Wednesday.

The bidders were asked to submit their documents to the department by 4.30pm. A shortlist of qualified candidates is scheduled to be announced on May 28. These candidates must meet financial, capability, technical and business portfolio requirements.

The five tenders included three existing operators -- Chevron, PTTEP and Total -- and two newcomers, Mubadala and OMV.

But Abu Dhabi's Al Jaber Group, which partnered with China's Haicheng Petroleum Machinery Manufacture Group and a Thai company, did not submit documents.

Energy Minister Siri Jirapongphan said four companies intend to bid on both gas blocks, while Total is only vying for Erawan.

"The ministry is confident this auction will be fair, as no one will be prioritised," Mr Siri said.

According to the department, each qualified candidate must have experience in petroleum E&P aspects in the sea of at least 100 million standard cubic feet per day (MMSCFD), as well as paid-up capital from the parent firm of at least US$4 billion (127 billion baht) for Erawan and $2 billion for Bongkot.

The investors can access data related to the Erawan (G1/61) and Bongkot (G2/61) blocks from May 30 to June 1 and study it in the data room from June 7 to Sept 21. Investors must place collateral of 7 million baht per gas block to access the data.

The department has set Sept 25 as the date for investors to submit their bidding proposals and will hold the screening period from September to November, while the winning bidders will be announced in December.

A contract signing is scheduled for next February. The operators must produce 800 MMSCFD for the Erawan block and 700 MMSCFD for Bongkot.

The blocks will be run under production-sharing contracts (PSC), replacing the concession contract model.

Currently, the two blocks produce a combined average of 2,110 MMSCFD, accounting for up to 75% of gas production in the Gulf of Thailand. The current concessions for Erawan and Bongkot will expire in April 2022 and March 2023, respectively.

The two blocks have been operational for 40 years.

Nasir Al Nabhani, Mubadala's executive director, touted the company's "excellent track record" and operating capabilities in Southeast Asia, spanning Thailand, Malaysia, Indonesia and Vietnam.

"We have no worries regarding our finances, drilling technology and experience because we have several oil and gas blocks across the region," Mr Nabhani said.

Mubadala said the company has $65 billion in assets, demonstrating its strong financial capability to operate in Thailand.

"We believe we are equipped to play a sizeable role in the new arrangements for these strategic gas assets in Thailand," Mr Nabhani said.

A source from PTTEP said that while two winning bidders will be announced for the blocks, any of the five companies can form partnerships, like PTTEP and Total, so the current process will allow all parties to demonstrate their qualifications to match the government's requirements.

Sarawut Kaewtathip, the department's deputy director-general, said capital expenditure to invest in the upcoming auction for the Erawan and Bongkot gas blocks is projected at roughly 1.2 trillion baht during 2022-33.

All 1.2 trillion baht will be injected into the country's energy sector, while an additional 2.1 trillion will circulate from supporting industries: for example, new equipment purchases, marine transport, accommodation services and petroleum rig assembly.

This investment is also aimed at generating 700 billion baht in revenue for the country, while the winning bidders will gain 200 billion from the auction.

Mr Sarawut said the department's estimate does not include downstream sectors such as power utilities, cooking gas, petrochemicals and plastic converters.

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