SET-listed energy firm PTT Exploration and Production (PTTEP) Plc has won the bid to explore and produce petroleum in both Bongkot and Erawan blocks in the Gulf of Thailand.
Siri: Deal will benefit Thailand
The revenue from the concessions could provide the country about 550 billion baht over the next 10 years, Energy Minister Siri Jirapongphan said on Thursday.
Mr Siri reported the outcome of the bid at a cabinet meeting in Nong Khai province.
The cabinet then endorsed the outcome and awarded PTTEP and its partner, MP G2 (Thailand) Limited, the rights to explore and produce petroleum.
MP G2 is a subsidiary of Mubadala Petroleum (Thailand) Holding Limited.
The Ministry of Energy is expected to sign the contract with PTTEP and its joint-venture partner in February next year.
Both Block No G1/61, also known as "Erawan Field", and Block No. G2/51, or "Bongkot Field", are located in the Gulf of Thailand.
PTTEP will have the right to explore and produce petroleum for 20 years, with an option to extend its operations for another 10 years.
The state-owned company is said to have beaten Chevron, an energy company from California, and its partner, Mitsui Oil Exploration.
According to the minister, PTTEP won the bid as its proposal was better.
He said PTTEP offered to sell gas -- a by-product of petroleum exploration -- to the state at 116 baht per million Btu, which is lower than the current prices of 165 baht per million Btu quoted at Erawan, and 214.26 baht per million Btu at Bongkot.
"This would help reduce the production cost for gas-powered electricity by 17 satang per unit," Mr Siri said.
He added that PTTEP also offered a more attractive profit-sharing deal.
Under the bid document, the state demands that the offer for profit-sharing must not be less than 50%.
Mr Siri said PTTEP offered to share 68% of the revenue it receives from the Erawan Field. For the Bongkot Field, it offered to share 70% of the profit it receives, which is even better, he said.
"As a consequence, the government would earn 100 billion baht more," said the minister.
Mr Siri said exploration and production operations in the two blocks would help reduce liquefied petroleum gas imports by 22 million tonnes, or 460 billion baht.
The sum could be used for further investment, that could in turn feed about 1.1 trillion baht to the economy.
The concessions for the Erawan and Bongkot are currently held by Chevron and PTTEP, are due to expire in 2022 and 2023, respectively.
Erawan and Bongkot produce a combined average of 2,110 million standard cubic feet per day (MMSCFD), or about 75% of the total production from the Gulf of Thailand.