The government is stepping up its efforts to diversify its power sector to move away from a reliance on gas production.
Thailand’s increasing gas demand will likely be met via imports as domestic production slows and the government ramps up its efforts to diversify its power sector and move away from an over reliance on gas production, according to a report by Fitch Solutions.
The government’s oil and gas arm PTT outbid the likes of Chevron and Mitsui for the rights to operate the Erawan and Bongkot which are the country’s two biggest gas blocks in an effort to boost its output levels. “PTT will be expected to maintain a minimum production of 15.5 bcm per annum from the two blocks, some way lower than their current production of 21.7 bcm,” Fitch Solutions revealed.
Likewise, PTT’s alternative to offset declining productions will lean towards liquified natural gas (LNG) imports on the back of its competitive prices, flexible delivery and wider availability, the report added. “The state-owned enterprise’s (SOE) commitment to gas remains strong wit up to 23% of its $9.3b 2019-2023 capex reportedly ready to be allocated to its natural gas business, focusing on expanding LNG import capacity and construction of new gas pipelines nationwide,” Fitch Solutions noted.
Thailand’s LNG imports mostly come from Qatar as part of PTT’s 20-year deal with the country in 2015 for the delivery to 20 metric tonnes per annum (mtpa). However, with plenty of new spare capacity coming onstream over the coming years and ample supply flooding the market, Thailand is said to have sufficient room to scout for new contracting opportunities in the Asian LNG market.
That being said, declining domestic gas production, coupled with a slowing upstream investment and the prospect of growing more heavily reliant on gas imports has pushed the government and PTT to maneuver away from gas, the report highlighted. According to Thailand’s latest power development plan, authorities are setting out higher generation targets for clean coal technology, hydropower and renewables energy for the period between 2015-2036.
“Similarly, the Thailand alternative energy development plan of 2015 calls for the share of renewable energy to be expanded from the current 12% to 30% by 2036, whilst calling for significant new investments in the non-hydro renewables segment, notably biomass,” Fitch Solutions added.
As a result of these transitions, government data indicated that Thailand’s gas consumption is on course to decline 1% YoY with the power sector outweighing the relatively solid growth in gas utilisation in the industrial and petrochemical industries.
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