Renewal of gas licence at Pailin shortly

Renewal of gas licence at Pailin shortly

The Pailin gas block in the Gulf of Thailand.
The Pailin gas block in the Gulf of Thailand.

The renewal of a licence to produce gas from the Pailin block in the Gulf of Thailand is likely to be processed quickly early next year to avoid problems that could affect domestic gas supply, says the Department of Mineral Fuels.

Lower gas production results in Thailand importing greater quantities of liquefied natural gas.

Surges in the price of electricity have been attributed to gas price fluctuations.

The gas production licence for the Pailin block is set to expire in 2028. Under a law, the department is able to extend the production period for another 10 years if operators request it.

The block is cooperated by PTT Exploration and Production Plc (PTTEP), which made a 60% investment, and US-based Chevron Corp, which holds a 40% stake.

On average, they produce 400 million standard cubic feet per day (MMSCFD) of gas.

This represents almost 10% of Thailand's overall gas consumption.

The department is conducting a joint study with Chevron regarding the business prospects at Pailin in order to determine the quantity of gas reserves and estimate the future production level and budget required, said Sarawut Kaewtathip, chief of the department.

The duo expect to conclude the study early next year, helping the department decide on whether to proceed with the licence renewal, Mr Sarawut said.

The decision will give operators sufficient time to prepare for new gas exploration and production, he said.

PTTEP earlier demanded officials ensure a smooth renewal of the gas production licence for the Pailin block.

The company could be worried about a repeat of the delay when the Erawan gas block in the Gulf was auctioned, with PTTEP winning the bid to succeed Chevron.

The delay resulted in a decrease to the domestic gas supply.

PTTEP won the auction to operate the Erawan block in 2018, but a legal dispute arose between Chevron and the department over which party would pay to decommission transferrable assets, leading to a two-year delay to PTTEP's plan to enter Erawan to prepare for production.

Mr Sarawut said officials are also preparing to organise a Round 25 auction for petroleum exploration and production at nine onshore blocks: seven in the Northeast and two in the central region.

The department, together with the Natural Resources and Environment Ministry, already conducted a field survey at the sites.

Petroleum blocks that are not located in disputed areas will be selected first for the auction, he said.

Under Thailand's 2018 national gas plan, demand for gas in the country is expected to increase by 0.7% per year between 2018 and 2037.

Demand should rise to 5,350 MMSCFD in 2037, up from 4,466 MMSCFD as of the end of June this year.

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