Erawan field handover offshore Thailand still stalled

PTTEP is still waiting for permission from Chevron to access production facilities at the Erawan gas field in the Gulf of Thailand.

PTTEP is still waiting for permission from Chevron to access production facilities at the Erawan gas field in the Gulf of Thailand.

Although Chevron discovered and developed Erawan, one of the country’s main offshore gas production centers, the Thai government decided that PTTEP would assume operatorship from April 2022.

Chevron is understood to have been in a dispute with the government over negotiations concerning decommissioning liabilities.

PTTEP said in its latest results statement that even if it gains access to the site in the near future, Erawan appears unlikely to reach the production level in 2022 stipulated in the production-sharing contract.

PTTEP’s plan was to setup eight platforms and pipes in the first quarter of 2021, then begin drilling by the second quarter to add production capacity.

Under the new concession terms with the Thai government, PTTEP must deliver 800 MMSCFD.

Chevron, which lost out to PTTEP in an auction in 2018 for the new concession, has operated the Erawan field for decades.

PTTEP expects the field to have a capacity of 500 MMSCFD when Chevron relinquishes its concession and the Thai company has said it would find other sources, including the Bongkot and Arthit fields, if Erawan could not reach 800 MMSCFD due to the delays.

Chevron’s dispute with the government centres on Thailand’s request that Chevron pay the full decommissioning costs of around $2 billion for assets in the Erawan gas field, including those it will hand over to PTTEP.

Chevron argues that, under the terms of its initial contracts from 1971, it is only liable for infrastructure that is no longer deemed usable and the transferred assets are the responsibility of the new operator.

However, the company has been taking steps to ensure efficient transition as possible, with a plan to partly source gas from other fields in the Gulf of Thailand to minimize the impact on the country’s energy supply.

PTTEP’s first half production was 413,168 boe/d, 20% up on the same period in 2020. Among the main factors were start-up of the Malaysia Block H project, and higher gas nomination from projects in the Gulf of Thailand.

The company plans to speed up development of oil and gas fields to support long-term growth following its Dokong-1, Sirung-1, Kulintang-1 and Lang Lebah discoveries offshore neighboring Malaysia.