Thailand is witnessing an oil and gas renaissance with a handful of players driving exploration and production in the Southeast Asian nation.
National upstream company PTTEP leads the pack with producing fields offshore and onshore Thailand, while Canadian independent Valeura Energy is now making its mark with assets acquired from Singapore’s KrisEnergy and Mubadala Petroleum of the United Arab Emirates.
US supermajor Chevron is still active in Thailand, despite last year losing its long-term operated Erawan giant gas field to PTTEP after the mature producing asset was put up for auction.
The company is understood to still be considering development of its Ubon field — an on again, off again offshore project that has stalled several times during industry downturns.
While some observers have long expected Chevron to divest its remaining Thai assets, the company has told Upstream it bid for offshore exploration Block G2/65, one of three tracts offered by the Department of Mineral Fuels (DMF) in the country’s 24th licensing round.
PTTEP also participated in the 24th Thailand Petroleum Bidding Round although it is not known what acreage whet the company’s appetite.
PTTEP leads the charge
PTTEP has come a long way from being a domestic upstream player to enjoying regional E&P success — and then spreading its wings further, to the Middle East and beyond.
At home, its flagship offshore assets include the giant Bongkot gas field, the producing Arthit field, where a carbon capture and storage scheme is planned, and the Erawan gas condensate field.
The main difference with the revised Erawan and Bongkot contracts — PTTEP now is the sole holder of the latter asset — is that they are now, or will be held, as production sharing contracts rather than concessions, Thailand’s historic norm.
PTTEP chief executive Montri Rawanchaikul says that moving to PSCs was a big deal for the Thai government and the DMF. But the company itself has experience in operating under the PSC model in countries such as Malaysia and Indonesia.
“Transferring from concessions to PSCs is one thing, [but we] know the Bongkot field well and we know the facility well,” he says, noting PTTEP’s successful transition to sole operatorship of Bongkot following the exit of former Bongkot partner TotalEnergies.
However, the takeover of Erawan has proved more eventful. Since completion of the deal last April, PTTEP now has a 60% operating interest in the G1/61 project (consisting of the Erawan, Platong, Satun and Funan fields) and its sole partner today is Mubadala Petroleum on 40%.
One of the key criteria that helped PTTEP win the G1/61 PSC, which also drew a bid from Chevron, was its commitment to maintaining production at certain levels, but this plan was thwarted.
PTTEP had sought access to the Erawan gas field when it was still operated by Chevron so it could carry out work and install new infrastructure necessary to reach its production level commitments. However, permission was not forthcoming, with the US company reportedly citing safety concerns.
“So we missed a chance to go into the area two years before the PSC started,” Montri says.
He tells Upstream that the Chevron-operated concession once had eight central processing platforms to handle the gas, but two had to shut down four months before the concession ended.
At the time of the transfer on 23 April last year, G1/61’s production stood at about 370 million cubic feet per day of gas, while PTTEP’s commitment with the Thai government was to produce 800 MMcfd.
“You cannot do that magically. You need time,” Montri says.
New terms
PTTEP was faced with going back to the DMF and renegotiating the terms of the G1/61 contract.
Montri says the company is working hard to install new platforms, drill wells and lay pipelines at the asset.
“So, hopefully by the middle of 2023, we will see up to 400 MMcfd. By the end of this year it will be 600 MMcfd. And by April 2024, we will meet the target of 800 MMcfd,” he insists.
“We told the Thai government, ‘you know that this is not our fault’,” he says of the delayed target.
The DMF endorsed PTTEP’s revised development plan for G1/61, complete with new terms for gas sales and payment for the gas.
However, there has been some fallout for customers, with the ambitious production target now two years behind its original forecast date.
“Today it is not only we that suffer because of this gas [shortage], but all the country,” he says.
Thailand currently meets 60% of its gas demand with domestic production and volumes produced in neighbouring Myanmar, with the remaining 40% coming from imported liquefied natural gas.
“When the gas within that 60% drops, you need more LNG,” he notes, which leads to Thailand’s power producers having to pay more for their feed gas.
24th bid round
Meanwhile, a spokesperson for Chevron confirmed to Upstream that it had submitted a bid for Block G2/65, adding that the proposal showcases the company’s “deep knowledge” of the Gulf of Thailand and offers “the significant opportunity to utilise existing Chevron-operated facilities in other blocks in the Gulf of Thailand”.
The spokesperson said: “We would welcome the opportunity to partner with the DMF to develop petroleum from Block G2/65 to further strengthen the nation’s energy security today and work together on the solutions for tomorrow, as we advance towards net zero.”
The three blocks on offer all contain prospects and play types that have been technically proven by previous exploration activities on nearby acreage, the DMF noted.
The 8487 square kilometre Block G1/65 comprises areas A and B, with Area A containing the relinquished Jamjuree South production area.
Block G2/65 spans about 15,030 square kilometres, while Block G3/65 — which also hosts areas A and B — covers about 11,646 square kilometres. Area A contains the relinquished Bussabong and Chang Dang production area, while Area B hosts the relinquished Pikul production area.
The awarded PSCs will have a six-year exploration term that can be extended once for up to three years, followed by a 20-year production period.
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