Thailand could extend low energy prices for another 20-25 years if the country successfully concludes negotiations on joint petroleum production and taps into energy resources in overlapping claims areas (OCAs), according to caretaker Finance Minister Pichai Chunhavajira.
In his keynote speech at the Dailynews Talk 2024 titled "Thailand: Future and Beyond", Mr Pichai said that Thailand's economy had grown after the country discovered natural gas in the Gulf of Thailand and launched the Eastern Seaboard project, benefiting from low cost energy available from the Gulf.
However, with technological changes, the country needs to adapt to produce new products that the global market demands, he noted. Unfortunately, these new products are not yet generating revenue for the country. Therefore, during the current transition period, Thailand should optimise or prolong existing production platforms, which would continue to be used for another 25-30 years before they can be phased out.
"The key sector we should prolong or optimise is energy resources [hydrocarbons]. About 50 years ago, we discovered energy sources in the Gulf of Thailand, allowing us to receive gas at a low cost of just US$2 per million British thermal units [BTUs]. Today, the price has risen to $6 per million BTUs, triple the previous cost, but still less than half the market price, giving us a competitive advantage since energy costs are a major component of various goods," he said.
"However, as the country's energy demand has increased to as much as 5 billion cubic feet, we can only produce 2.2 billion cubic feet ourselves. Therefore, more than half must be imported at more than twice the price [of gas from the Gulf of Thailand]. In the event of war, prices could rise by 3-4 times, impacting petrochemicals and related businesses, such as LPG and electricity, where more than half of the electricity cost comes from fuel."
He said Thailand must explore energy sources both in the Andaman Sea and the Gulf of Thailand, particularly in OCAs, which are believed to contain accumulated energy sources that would help Thailand prolong the existing industrial platforms for another 20-25 years with lower energy costs, possibly at only two-thirds of today's prices.
In a related development, Mr Pichai said the country's economy at present could be described as being near crisis, as the economic growth rate has been declining steadily, averaging only 1.9-2% over the past decade.
"Some people believe the economy will recover and return to its potential growth rate of around 3.5%. But if we do nothing, Thailand's economic potential could drop below 3.5%," he said. "Today, it is in a near-crisis situation."
He also mentioned foreign direct investment (FDI), saying that Thailand needs measures to prevent foreign investment from taking over the entire upstream, midstream, and downstream industries of the country. In the past, foreign investments were typically in upstream industries, allowing Thai entrepreneurs to benefit from the midstream and downstream sectors.
But now, some foreign investors want to invest in all stages -- upstream, midstream, and downstream, he noted.
Mr Pichai said that according to the Board of Investment's data, foreign investors submitted investment promotion requests worth a total of over 2 trillion baht during 2023-25, averaging 600 billion baht per year, close to what the country had in the past.
He also noted that Thai entrepreneurs need to adapt to global trade conditions, which are increasingly focused on green initiatives, to survive in the future. If they do not adapt, Thai exports will be unable to compete due to higher costs, he said.
