PTT Exploration and Production Plc (PTTEP) is accelerating gas production at its Erawan gas block in the Gulf of Thailand to avoid paying a fine if it fails to deliver the amount required by a contract signed with PTT Plc, the country's sole gas seller.
"We are confident we will not have to pay for a shortfall of gas," said Montri Rawanchaikul, chief executive of PTTEP.
"Our production capacity is currently 400 million standard cubic feet per day [MMSCFD]. The amount will keep increasing from March, reaching 800 MMSCFD on April 1."
PTTEP operates Erawan, also known as G1/61, through its subsidiary PTTEP Energy Development Co which is speeding up work to install equipment and machines at wellhead platforms.
Mr Montri was speaking after PTT imposed a 4.3-billion-baht fine on the gas supplier for not complying with a gas purchase contract.
PTTEP earlier faced a delay in entering Erawan to operate the gas block after it won an auction in 2018. This resulted from a prolonged conflict between its predecessor, US-based Chevron Corp, and the Mineral Fuels Department over which party is responsible for paying transferable asset decommissioning.
The conflict was settled in 2022, allowing PTTEP to fully prepare for gas production.
However, the delay and a lack of new petroleum exploration at the gas block caused a drop in gas supply. In 2023, gas production was just 200 MMSCFD.
A source at the Energy Regulatory Commission said if PTTEP cannot increase gas production as planned, it can import liquefied petroleum gas (LNG) as a substitute to avoid fine payment, but it should sell it at the same price as that of gas from Erawan.
Gas from domestic sources has been cheaper than LNG in recent years as the latter faces price fluctuations due mainly to the impact of the Russia-Ukraine war.
Thailand's increased use of expensive LNG is blamed for driving up electricity prices.
Gas comprises 60% of fuels used for power generation in the country.