PTTEP to bid for new Bongkot production licence

PTTEP to bid for new Bongkot production licence

Mr Somporn speaks at yesterday's media briefing. He says PTTEP believes it can win the Bongkot auction.
Mr Somporn speaks at yesterday's media briefing. He says PTTEP believes it can win the Bongkot auction.

PTT Exploration and Production Plc (PTTEP), the only SET-listed upstream petroleum firm, says it is ready to join the auction for the Bongkot petroleum block to continue its production there.

Energy policymakers have decided to open the bidding for licences to two gas fields: Bongkot, operated by PTTEP, and Erawan, operated by Chevron.

The licences are due to expire gradually in 2022 and 2023.

"With partners in our Bongkot production, we are ready to take part in the new bidding," said Somporn Vongvuthipornchai, PTTEP's president and chief executive.

The auction will open in the second half of this year at the earliest after a revised version of the Petroleum Act is passed by the National Legislative Assembly. The Energy Ministry has said the winners would be announced publicly by mid-2017.

Mr Somporn said PTTEP believed it could win the auction because the government would rather keep the petroleum operation in-house.

"Gas output of 850 million standard cubic feet per day [MMSCFD] will disappear from the country's pool of gas in about three years if a new winning bidder gets it," he said.

Mr Somporn declined to say whether PTTEP would bid for the 1,240-MMSCFD Erawan field.

Energy Minister Anantaporn Kanjanarat gave the nod to PTT acquiring Chevron's stake in Thai gas resources. US-based Chevron is considering selling assets in Thailand as part of its plan to unload investments in Asia.

Mr Somporn said PTTEP was ready to comply with new contract terms, as its old contract was completed two decades ago.

"But the government will have to consider which model it wants to use: the production-sharing contract [PSC] system or concessions," he said. "Either model will affect our costs slightly."

Under a concession model, the operator pays the state a fixed royalty fee. Under the PSC system, the operator pays through both royalty fees and petroleum products.

Energy policymakers have been reluctant to adopt the PSC system because oil prices can fluctuate and can be inadequate to cover costly petroleum storage and maintenance. But activists insist the PSC model will generate higher returns.

Petroleum production from Bongkot accounts for 20% of PTTEP's total output, some 330,000 barrels of oil equivalent per day.

PTTEP is seeking new assets in Asean and the Pacific, but no deals have been finalised.

PTTEP shares closed yesterday on the Stock Exchange of Thailand at 77 baht, down 75 satang, in heavy trade worth 1.63 billion baht.

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