State-run Electricity Generating Authority of Thailand (Egat) is fuelling its growth in liquefied natural gas (LNG) shipping by reducing its gas purchases from national energy conglomerate PTT in a new 10-year contract.
The move came after the Egat board approved the import of an additional 4 million tonnes of LNG from 2020 to 2022, paving the way for the company to enter the second stage of its LNG business, said Kulit Sombatsiri, Egat chairman and permanent secretary for energy.
Egat imported 65,000 tonnes of LNG last December and in April 2020, marking the first stage of its LNG expansion.
Mr Kulit said the new lots of 4 million tonnes will be gradually delivered, with 600,000 tonnes scheduled this year, 1.9 million tonnes next year and 1.5 million tonnes in 2022.
As Egat switches focus to LNG, currently trading at low prices in the spot market, it needs to decrease the amount of gas purchased from PTT in multi-year contracts to 736 million standard cubic feet per day, replacing it with LNG.
The gas is used as the main fuel at Egat's five power plants.
Egat executives yesterday signed a 10-year gas sale agreement, known as a GSA, with PTT because its present agreement is scheduled to expire at the end of June. Gas deliveries under the new GSA are set from next month to July 2030.
Mr Kulit said the new GSA is valued at 340 billion baht.
Usually Egat must buy enough gas from PTT to meet real demand for its five power plants, but this time the contract allows Egat to buy less so it can use more LNG.
LNG shipping licences have been granted to five firms: PTT, Egat, Ratch Group Plc, Gulf Energy Development Plc and B.Grimm Power Plc.
PTT's power generation arm, Global Power Synergy Plc (GPSC), is expected to apply for a licence soon, according to a source who requested anonymity. GPSC president and chief executive Chavalit Thippawanich said earlier this month that the company was preparing to submit an application letter to the Energy Regulatory Commission.
LNG shipping had been monopolised by PTT since 2011. Egat entered the market after being granted a shipping licence last year. The government considered opening the LNG market in 2015, but there was no movement until late 2019 because LNG prices exceeded gas extraction costs in the Gulf of Thailand.