ERC plans to develop free market for LNG trade

ERC plans to develop free market for LNG trade

The Energy Regulatory Commission (ERC) plans to fully develop a free market for liquefied natural gas (LNG) trade in the next three years to ensure enough gas supply and fair prices.

LNG import had been monopolised by national oil and gas conglomerate PTT Plc since 2011. The Electricity Generating Authority of Thailand entered the market after being granted a shipping licence in 2019.

The ERC later granted licences to six other firms -- Electricity Generating Co, Gulf Energy Development Plc, B.Grimm Power Plc, Hinkong Co, PTT Global LNG Co and Siam Cement Group -- in line with the government's policy to open the LNG market.

ERC secretary-general Khomgrich Tantravanich said steps are being taken to pave the way for the free market on condition that the seven firms are required to sell gas to buyers who do not have long-term purchase agreements with PTT.

The long-term purchase is based on take-or-pay contracts which commit buyers to paying for the fixed amount of gas though their usage may be lower than the amount stated in the contracts.

The seven companies will be first allowed to import LNG from the spot market at 0.48 million tonnes this year, 1.74 million tonnes next year and 3.02 million tonnes in 2023.

Imported LNG will feed gas-fired power plants which produce electricity for use and sale among factories.

In the next step, LNG shippers will be given permission to import gas through long-term purchase contracts.

They will be eventually allowed to re-export gas.

"We want to see free competition under our regulations in order to ensure reasonable electricity prices'' said Mr Khomgrich.

He said at least two firms are likely to compete in the long-term LNG supply but declined to name them.

In 2019, 72% of natural gas supply came from domestic sources, including Malaysia-Thailand Joint Development Area in the Gulf of Thailand, 15% came from Myanmar and 13% from LNG imports.

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