Next E&P auction planned for April

Next E&P auction planned for April

Round 23 excludes onshore blocks

The Mineral Fuels Department has decided on April to begin a new bidding round for offshore petroleum exploration and production (E&P) activities after postponing new licensing for several years.

Sarawut Kaewtathip, the department's director-general, said the new round is called Round 23 instead of 21 because the department cancelled that round, while the bidding for the Erawan and Bongkot gas fields in 2018 counted as Round 22.

"The department is preparing Round 23 information such as the number of offshore petroleum fields in the Gulf of Thailand and sending invitations to potential companies by March," he said.

"After each company studies the E&P details, a request for proposals and terms of reference will be sent to them in April. Each company will then submit a proposal by September."

Mr Sarawut said screening and selection procedures will be conducted in the fourth quarter, then each company will be granted E&P licences.

"Contract signings with each selected company are scheduled for January 2021," he said.

Mr Sarawut said onshore E&P blocks will be excluded from Round 23 because of limitations under the Agricultural Land Reform Act of 1975 for E&P activities.

"Unless this act is amended, this limitation for onshore petroleum blocks will remain," he said.

The E&P round for these gas fields has been postponed for over 12 years.

The country completed the E&P licensing for Round 20 in 2008 and there were plans to begin participation in Round 21 in 2007.

A total of 29 licences have been delayed because of political instability and economic slowdowns, according to the department's report.

Many advocates have called for a delay and revision of the country's petroleum laws from an E&P concession to a production-sharing contract.

In June 2017, two revised laws -- the Petroleum Act and Petroleum Income Tax Act -- were enacted.

The government then opened bidding for the Erawan and Bongkot gas fields in 2018.

Mr Sarawut said the department is concerned about production-sharing contracts because this model is too complicated for doing business in the long term.

Lower crude oil prices are a key reason many countries are trying to reduce barriers and facilitate investment in E&P activities.

"Norway's government exempts E&P companies from royalty fees," he said.

"The production-sharing contract seems to allow the government, as the asset owner, to control all activities, with the concession free for concessionaires, but they are subject to pay taxes to the government."

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