Thailand's energy minister has welcomed the decision by US supermajor Chevron to continue negotiating rather than seek arbitration to resolve a dispute over who should pay for the decommissioning and removal of offshore structures.

Thailand wants Chevron to pay the full decommissioning costs, estimated by local newspaper Thansettakij at some 75 billion baht ($2.5 billion), for the facilities at its producing Erawan concession that will be acquired in April 2022 by national upstream company PTTEP.

Energy Minister Sontirat Sontijirawong said on Sunday that Chevron's decision was a good sign that the two parties could work together to resolve the dispute and ensure a smooth handover of the gas field.

"Chevron's decision to hold off the arbitration process to continue negotiations is welcomed," Sontirat said.

"I believe that we will arrive at the best agreements while prioritising Thailand's interests," he added.

The issue dates back three years to when the kingdom retroactively enforced a new ministerial regulation requiring operators to pay the decommissioning costs of all infrastructure they have installed even if they no longer operate it.

Chevron’s stance is understood to be that under the terms of its initial concessions, the company is only liable for facilities that are deemed redundant before it hands them over to a new operator.

However, the ministerial regulation spells out that Chevron would be liable for all future decommissioning costs at the Erawan asset, even for those facilities that it will be transferring gratis to PTTEP.

"Total will particularly be tracking the developments between Chevron and the government... since it will set a precedent that the government could apply to it," Readul Islam, research analyst at Rystad Energy, was quoted as saying by Reuters.

Chevron was awarded the Erawan field blocks’ concessions in the early 1970s. However, late last year it lost out in an auction to PTTEP and the national player will take over the mature producing Gulf of Thailand asset in April 2022.

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Thailand hopes for 'best agreement' in Chevron decom dispute