PTT Exploration and Production Plc (PTTEP) is expediting plans to supply natural gas from sources other than the Erawan block after losing hope it can access the area because of a legal dispute involving US-based Chevron Corp, says a source at PTTEP who requested anonymity.
Last year, PTTEP predicted it might not be able to enter the gas field in the Gulf of Thailand to install production facilities as planned.
Known as G1/61, Erawan is operated by Chevron, but its concession expires in April next year. PTTEP, which won the auction for the G1/61 concession in December 2018, can begin operations starting in 2022.
Transferable assets need to be decommissioned, but there is a dispute over who will pay -- Chevron or the Department of Mineral Fuels (DMF).
Even if Chevron allows PTTEP to start its gas production now, the company is still required to engage in gas exploration first, a job that should have started almost a year ago, the source said.
"It is too late now," said the source.
After the 2018 auction, Chevron has not initiated any new gas exploration projects during the transition period to the new operator.
Under the production-sharing contract (PSC) model, minimum gas production at Erawan is set at 800 million standard cubic feet per day (MMSCFD).
However, the gas supply from Erawan is currently lower than the PSC requirement by 200-300 MMSCFD as a result of no new exploration.
"The best solution is to procure additional gas to replace the volume shortages from Erawan," said the source.
"This has prompted energy authorities to seek new gas sources."
The source said the DMF asked PTTEP in March for additional gas production at Bongkot and Athit gas blocks to substitute for the lower supply from Erawan, but supply from these two fields, also located in the Gulf of Thailand, can cover only 80% of the gas loss.
The remaining 20% must be supplied through the import of liquefied natural gas, said the source.
Natural gas is the main fuel for power generation in Thailand.
If gas production at Erawan and Bongkot gas fields, which account for 30% of the country's power generation, is affected, national gas supplies may be impeded, said the source.