Energy policy makers are preparing to change the way gas is supplied to various sectors, with the ultimate goal of reducing electricity costs, according to Energy Minister Pirapan Salirathavibhaga.
The change would involve giving power producers more access to cheaper gas sources by better managing supplies from the two gas pools now in use, the minister said on Wednesday.
Under a new regime, he said, some of the supply from the two pools will be merged, so that power producers pay slightly less for gas and petrochemical producers pay slightly more.
Gas accounts for about 60% of the fuel used for power generation, but under a two-pool pricing regime, power plants typically pay more for gas than petrochemical plants at present.
The two pools are known as Gulf Gas and Pool Gas. Gulf Gas is the weighted average price of natural gas from fields in the Gulf of Thailand. Pool Gas is the weighted average wellhead price of gas from the Gulf, Myanmar and imported liquefied natural gas.
Local petrochemical producers for years have benefited from access to cheaper Gulf gas, which has helped make Thailand a regional petrochemical hub. Electricity generation, meanwhile, has had to rely on more costly pool gas, although the supply is more reliable, which is an important consideration for power producers.
However, in 2022 the war between Russia and Ukraine led to a spike in the cost of imported LNG. This came at the same time as a disruption to some Gulf production because of delays in the transfer of an exploration block. The result was skyrocketing pool gas prices, which led to high power bills that have still not come down by very much.
The supply challenge could probably have been managed smoothly if not for the Covid-19 pandemic. Energy policy makers were still dealing with the high cost of subsidising electricity bills to help reduce the cost of living for people affected by the economic fallout from the pandemic.
The state-run Electricity Generating Authority of Thailand (Egat) has run up debts of more than 150 billion baht from supplying subsidised power. It was starting to see a way forward to paying down the debt, but the Pheu Thai Party had other ideas.
As part of its populist campaign, the party pushed to keep subsidising fuel and electricity costs, without offering any solution to help Egat with its finances.
Mr Pirapan said that under the new gas pool regime, cheaper gas for power producers would lead to a decrease in the fuel tariff of 0.11 baht per kilowatt-hour, or unit.
The current power tariff is 3.99 baht per unit for those who use less than 300 units, and no more than 4.20 baht for other users.
A source from PTT Global Chemical, meanwhile, said the higher price of gas feedstock would make very little difference to the company as the price could be reflected in the market price for its products.