Slim growth in Thai oil and condensate
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Slim growth in Thai oil and condensate

Sustained high prices support increased drilling, but gains could be limited, according to BMI research

Thailand faces a structural decline in proved oil reserves, but a notable increase was achieved in 2022, driven by accelerating drilling activities in the Gulf of Thailand.

The 15% year-on-year increase in proved oil and condensate reserves -- about 45 million barrels in all -- came entirely from the G1/61 and G2/61 offshore blocks operated by PTT Exploration and Production Plc (PTTEP). PTTEP now accounts for a sector-leading 57% of the country's total proved condensate reserves.

We expect condensate reserves to grow further in 2024 and beyond as PTTEP has been ramping up drilling activity in the G1/61 and G2/61 blocks that it acquired from Chevron. Based on drilling data from the Department of Mineral Fuels, the total number of wells being drilled in the two blocks increased to 66 in April this year, compared with two wells in April 2023.

Chevron drilled 13 wells in the B12/27 and B8/32 blocks in April 2024, a significant improvement from two wells drilled in 2023. Despite increased drilling activities, Chevron has not been able to add reserves. Production from existing fields further reduced Chevron's total proved crude and condensate reserves by 45% and 51% respectively between 2022 and 2023.

Sustained strength in crude oil prices is supporting current efforts by PTTEP, Chevron and other companies to increase drilling activities. However, lack of new discoveries combined with dwindling reserves in the majority of maturing fields could undermine long-term investment potential.


BMI maintains a bullish outlook on condensate reserve growth, but prospects for crude oil reserve growth are expected to remain limited. We expect exploration activities to gain momentum in 2025 and beyond when PTTEP and Chevron begin fresh exploration efforts in blocks G1/65, G3/65 and G2/65, awarded by the Department of Mineral Fuels in 2023. The three blocks covering 30,000 square kilometres in the Gulf were offered in the department's 24th petroleum bidding round in 2022.

However, with exploration now increasingly favouring natural gas over crude oil, the impacts on crude and condensate reserves are uncertain. Potential growth in crude and condensate reserves will depend to a large extent on the outcome of exploration plans by PTTEP and Chevron.

A recovery in oil production from the Erawan field could lift the crude oil supply outlook for 2024. Thailand's total crude oil production in the first quarter of 2024 increased by 2.8% year-on-year to 78,000 barrels per day (bpd). The relatively modest growth is attributed to rising production from the Tantawan and Wassana oil fields.

The Wassana field, operated by Valeura Energy, could provide further upside as the company is conducting drilling. It indicated the discovery of oil from the drilling of additional two wells located in the G10/48 block in April 2024.

Sirikit, the country's largest onshore oil field with an estimated 21 million barrels of proved reserves, produced about 25,000 bpd on average in the first quarter of 2024. Sirikit field operator PTTEP Siam Ltd increased the number of wells to 14 in April from 10 a year earlier.

Given the large reserve base and momentum in drilling activities, potential growth in crude production in the short term is expected from the Sirikit field.

The Tantawan field, operated by Chevron Offshore (Thailand) Ltd, is another potential source of production growth. It is currently the largest source of production growth, contributing about 30% of incremental crude oil production in the first quarter of 2024. Chevron has been able to reverse production declines in the first quarter of 2024 after steep declines between March and September 2023.

Crude oil production from Tantawan rose 29% year-on-year to 15,000 bpd in the first quarter of 2024, but the outlook for significant production growth in the medium term remains limited because of falling reserves.

Potential growth in crude oil production for the first quarter of 2024 was weighed down by a 99% year-on-year decrease in production from the Erawan field, where maintenance shutdowns began in January. We expect a recovery in production from Erawan in the second quarter and for output to reach normal levels in the third quarter.

We project Thailand's crude oil production will increase by 3% year-on year to 77,000 bpd in 2024, supported by growth from the Erawan and Sirikit fields.


The prospects for condensate production remain high given ongoing drilling activity in the Bongkot and Erawan gas projects. Thailand currently produces condensate from four key sites: Bongkot, Erawan, Pailin and Arthit. Combined condensate production from the Erawan and Bongkot fields accounted for 57% of the country's total in the first quarter of 2024.

Increased drilling in the Erawan and Bongkot fields is expected to continue as PTTEP is committed to meet natural gas production targets set by the government.

Condensate production from both the Erawan and Bongkot fields rebounded strongly, growing by 61% and 51% respectively in the first quarter.

Ongoing redevelopment efforts in the Erawan and Bongkot gas projects offer further upside. Condensate production from the Bongkot Tai field has stopped since April 2023 and it remains uncertain whether it will resume in 2024. Failure to reverse production from Bongkot Tai could result in Thailand losing its potential to produce roughly 10,000 bpd of condensate annually.

Given the lack of new associated natural gas discoveries, Thailand's long-term condensate production growth will depend to a large extent on the performance of the Bongkot and Erawan projects.

BMI is a Fitch Solutions company. BMI is solely responsible for the content of this article, without any input from Fitch Ratings.

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