The use and development of alternative energy in Thailand has progressed exponentially in line with the policy of the Ministry of Energy. However, as electricity has become a requisite of modern life, we have not been able to rely completely on renewable energy for a steady source of energy. Therefore, LNG can contribute to Thailand’s future energy security.
LNG: The Truth about Thai Natural Gases
Thailand can produce about 71% of its domestic natural gas demand from gas fields in the Gulf of Thailand and the Malaysia–Thailand Joint Development Area, while the remaining 29% is imported from Myanmar and the Middle East. The natural gas used in Thailand is produced from three sources: 1) the Gulf of Thailand, 2) the Malaysia–Thailand Joint Development Area, and 3) gas fields in Myanmar. The majority of natural gases in the Gulf of Thailand are used as fuels for electricity generation, while wet gases are transferred to gas separation plants. The resulting gases are used for different purposes. For instance methane is utilized for power generation, while E gas and other gases are used as, among others, raw materials in petrochemical applications, cooking gas, and motor fuels. This, coupled with its cleanness and environmental friendliness, has helped LNG rise to prominence. – by Administrator of PTT LNG
Goals of Natural Gas Management
Through the Department of Mineral Fuels, the Ministry of Energy aims to manage the country’s natural gases through four strategies: 1) slow the growth of natural gas consumption, 2) maintain the production level of the sources in Thailand to prolong their lives, 3) obtain and manage LNG supplies, and 4) develop infrastructure to accommodate LNG imports. The Ministry is also looking to increase the number of LNG suppliers and distributors as well as grant third-party access to holders of natural gas procurement and wholesale licenses or other energy entrepreneur, allowing them to use or connect to natural gas transfer facilities.
Action Plan for the Establishment of the LNG Bureau
The Department of Mineral Fuels have studied and formulated an action plan for the establishment of the LNG Bureau, which will oversee LNG market control mechanisms that will be in effect concurrently with the total liberalization of LNG. Private entrepreneurs who are equipped to import LNG will also be granted permission to do within defined standards and reserve infrastructures, ports, storage tanks, LNG conversion facilities, and LNG transmission systems. What has been implemented as part of this action plan is the adjustment of Thailand’s LNG portfolio. In comparison to the previous ratio of long-term, mid-term, and spot contracts of 50: 30: 20 to 70, the revised portfolio will feature 70% long-term contracts (over four years) and 30% non-long-term contracts (under four years). The adjustment revolves around the three following considerations: 1) reasonable prices, 2) stability of the system, and 3) total liberation of the system.
These details will be submitted to the Ministry of Energy and the Energy Policy and Planning Office (EPPO) for approval and implementation. – “Taek Praden” by Porrasak Ngamsompark, Department of Mineral Fuels, in Online Prachachat Business.
Shares of LNG Imports Revealed
PTT PLC is also seeking to purchase LNG from various sources while the market power belongs to buyers in the hope of procuring enough LNG to help create energy security after LNG liberalization. It is projected that balance will be restored to the global LNG market in the next five years, while the market power will fall back into the hand of suppliers, driving its prices up.
Wirat Uanarumit, Chief Operating Officer of Upstream Petroleum and Gas Business Group of PTT PLC, reveals that the company has predicted a change in the direction of the global natural gas market in the next five years, with the market power returning to suppliers because the production capacity and the demand will balance themselves out, causing a rise in prices, compared to the current 6 USDs/million BTUs. As the market power still currently belongs to buyers, PTT is considering enter into LNG purchase contracts with a scattering of sources but will not rush the process in order to obtain the best prices. – Banmuang Online, July 18, 2017
Following the complete liberalization of the LNG business on August 1, 2017, the next mission is to liberalize the natural gas industry and allow private entrepreneurs to import LNG as well as reserve necessary infrastructure, ports, storage facilities, and the pipeline system of PPT PLC.
At the subsequent EPPO meeting, the Department of Mineral Fuels is expected to present their national LNG plans and portfolio, revised to correspond more closely with a shifting landscape and a change in demand.
The revised LNG portfolio has revealed the proportion of long-term sale and purchase contracts for private players, which appears to correspond with the third-party access policy of the Department of Energy. Upon a closer look, it can be seen that all the existing long-term sale and purchase contracts belong to PTT, obtaining imports from Qatar, Shell, BP, and Petronas.
Porrasak Ngamsompark, Chairman of the working group for the formulation of the LNG Bureau, the Department of Mineral Fuels, stated that the proportion of the portfolio for short-term contracts was considered “unfair” for new players, and the portfolio should be readjusted on the assumption that the natural gas demand would continue to increase steadily.
Recently, the Electricity Generating Authority of Thailand (EGAT) has obtained an LNG trade license. Previously, EGAT was a major purchaser of natural gases because they were the main fuels for its power plants. In addition, EGAT is set to invest in a floating storage regasification unit (FSRU) to secure its fuel supply for its new power plants in the future.
Furthermore, Gulf Energy Development, Co. Ltd., has also been found to be in the process of applying for an LNG license as well. — Prachachat Online, July 21, 2017
When put into effective, this new portfolio for LNG imports will contribute to the sustainable security of Thailand’s energy in the future.