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Thailand joins Asia gas-reserves search

Facing voracious demand for energy, Asian countries are planning either to increase imports or seek new upstream opportunities

Thailand's PTT Exploration & Production (PTTEP) is chasing gas supplies everywhere from Mozambique to the Gulf of Mexico, as well as Southeast Asia and the Middle East. It's doing so in a year that should, according to GlobalData, produce a host of licensing opportunities under more hydrocarbon-friendly fiscal regimes throughout Asia and Oceania, as other countries wake up to the threat of imminent shortages.

For instance, under the new revenue-sharing terms of the Hydrocarbon Exploration Licencing Policy (HELP), India will launch its first bidding round, while Indonesia will auction off more areas under its gross-split regime.

The demand for foreign direct investment is rising rapidly. As GlobalData reports, other countries are expected to offer licencing opportunities to foreign operators, including Sri Lanka, Pakistan and Malaysia. Some of these are for new blocks while others come under regular licensing programs. Predictably, most of the new blocks are being put up for bidding in the energy-hungry Asean nations.

Meanwhile, Thailand’s urgency is well justified. The nation of 69m people generates more than 60% of its electricity from gas—but the gas is running out. Most of its liquefied natural gas comes from two major fields in the Gulf of Thailand—the Bongkot and Erawan blocks operated respectively by PTTEP and Chevron. The two blocks have a combined output of 2.2bn cubic feet of gas a day. 

As Nikkei Asian Review pointed out in late February: “The fields, which have provided Thailand with power for more than 30 years, now face depletion.” According to the government’s Energy Policy and Planning Office, the country is confronting the possibility of a 6,300-megawatt deficit within three years unless there’s more gas-producing investment in the fields. Adding to the urgency, Chevron’s licence expires in 2022 and PTTEP’s a year later. 

Thailand’s urgency is well justified. The nation of 69m people generates more than 60% of its electricity from gas—and the gas is running out.
PTTEP is plugging some of the gap from its 8.5% stake in the Mozambique Rovuma Offshore Area 1 project, a globally-important field. As PTTEP’s president and CEO Phongsthorn Thavisin says, the group is trying to speed up the development of Mozambique Rovuma “as one of the world’s leading greenfield projects…and to increase our petroleum reserves in the future”. Located off southeast Africa’s coast, Mozambique Rovuma looks to be a vital resource for Thailand. Its five fields have a combined 75 trillion cf of recoverable natural gas.

Manila readies for LNG imports

But with the Bongkot and Erawan blocks running out, Thailand can’t afford to rely on its Mozambique asset and has recently joined other partners to secure rights in two blocks in the Gulf of Mexico as well as looking for opportunities closer to home. In an example of increasingly interlinked upstream investment in southeast Asia, 17% of PTTEP’s $18.6bn worth of assets are located in nearby nations.

While Thailand aims to find its own gas, the Philippines is banking on imports. In early March, it was evaluating offers to invest in a planned $2bn LNG import facility in Batangas province south of the capital, including a bid from Tokyo Gas, which is securing supplies as fast as it can to cement its dominance of Japan’s retail LNG market.

The Philippines is in a hurry to get the terminal up and running because the government must cover itself against future shortages. Its indigenous gas resources at Malampaya off the Palawan islands are running out, with the field due to be depleted by 2024. The import facility, which will take about 30 months to complete, includes an LNG storage facility with a capacity of 5m tonnes a year.

The Batangas project will add to another import terminal under construction on Pagbilao Island in Quezon province that will include from late 2018 a 650-MW plant using imported LNG.

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