A subtle dance on energy talks

A subtle dance on energy talks

EXPLAINER: Given climate obligations, gas exploration discussions with Cambodia are between a rock and a hard place

The Erawan gas field in the Gulf of Thailand. Located near Erawan, the OCA has the potential to become a new petroleum source for Thailand and Cambodia.
The Erawan gas field in the Gulf of Thailand. Located near Erawan, the OCA has the potential to become a new petroleum source for Thailand and Cambodia.

The meeting between Prime Minister Srettha Thavisin and his Cambodian counterpart Hun Manet last week revived hope for joint petroleum exploration and production between the two countries in the Gulf of Thailand.

They are preparing to hold further talks on the overlapping claims area, also known as OCA, where hydrocarbon resources may be discovered, leading to the development of a new petroleum block to help the two countries better manage their energy stocks.

Explainer expands on the need for Thailand to explore and produce more fossil fuel given its commitment to promoting renewable energy, part of a global trend to cut carbon dioxide emissions.

Q: What is the overlapping claims area?

The OCA refers to an area spanning 26,000 square kilometres claimed by both countries that is believed to be rich in fossil-fuel sources.

According to the Department of Mineral Fuels, the area is likely to be a new petroleum source because it is near the Bongkot and Erawan gas blocks.

Several rounds of talks on joint development of energy resources have been held, but there has been no progress on the dispute over maritime territory in the OCA.

Progress in negotiations has stalled since the Thaksin Shinawatra administration called for such discussions in 2001.

Sontirat Sontijirawong, a former energy minister, raised the issue in 2019 during a meeting of Asean energy ministers.

Without an agreement, the two countries face a stalemate on exploring for petroleum in the area.

Thai energy officials want talks to resume. Pichai Naripthaphan, a former energy minister, urged authorities in the two countries to work together to address their differences, paving the way for joint benefits from oil and gas production as well as in the petrochemical industry.

The OCA has high potential to be a new petroleum source because it is located near Erawan, Thailand's largest gas block, said Warakorn Brahmopala, director-general of the Department of Mineral Fuels.

Thailand wants to produce more gas to reduce its dependence on costly imported liquefied national gas, which drives up electricity bills.

Gas accounts for about 60% of the fuel used for power generation in the country.

Q: Why is Thailand keen to speed up OCA talks?

Energy experts are concerned the global trend for clean energy could hinder new petroleum development projects, which emit carbon dioxide.

Thailand committed to join the international community to fight global warming, caused by the increasing greenhouse gas emissions.

In 2021, premier Prayut Chan-o-cha vowed at the 26th UN Climate Change Conference in Glasgow Thailand would be more aggressive in addressing climate change, striving to reach carbon neutrality, a balance between carbon dioxide emissions and absorption, by 2050, along with a net-zero target, a balance between greenhouse gas emissions and absorption, by 2065.

Energy officials are working on a new national energy plan (NEP) based on Thailand's commitment to cut carbon dioxide (CO2) emissions.

Under the NEP, renewables will make up almost 50% of fuel used for power generation by 2037.

If joint petroleum development in the OCA continues to be delayed, it will be more difficult for the two countries to push ahead with the project as the global trend is to reduce global warming, said Mr Pichai, who is an advisor to Mr Srettha.

Gas is considered "cleaner" than oil, but Mr Pichai said higher gas production will be hard to justify as many countries are committed to reducing CO2 emissions generated by fossil fuels.

Khomgrich Tantravanich, secretary-general of the Energy Regulatory Commission, said he is also concerned about gas exploration and production development in the future because of global efforts to combat climate change.

Businesses want to use more renewable energy to avoid non-tariff barriers imposed on their products exported to countries with rules to reduce products made from carbon-intensive manufacturing, said Mr Khomgrich.

Q: How should Thailand and Cambodia push ahead with OCA discussions?

Mr Srettha said following his meeting with Hun Manet, both countries agreed to strengthen cooperation in the field of energy security and hold talks on joint exploitation of hydrocarbon resources in the OCA.

Bangkok and Phnom Penh have agreed to discuss the delimitation of maritime boundaries along with the exploitation of energy resources, according to a government statement.

The Foreign Affairs Ministry was instructed to consult with the Energy Ministry and Royal Thai Navy on the issue for further discussion with the Cambodian side, said Mr Srettha.

Economist Anusorn Thammajai, a former board member of the Bank of Thailand, said if the talks are successful, the next stage of petroleum exploration and production, known as E&P, should not prove difficult.

He said he believes the development of a new E&P facility in the OCA would take less time than the platform in Erawan, which was first explored some 40 years ago.

Mr Anusorn said modern technology and updated geographical information about the OCA would facilitate the work of developers and operators.

Gas pipelines and gas separation plants should also benefit production plans, he said.

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