Running Out of Gas: Thailand’s Growing Energy Dilemma
By Tim Daiss
Last week global oil majors Chevron and Royal Dutch Shell said that they wanted to export liquefied natural gas (LNG) to Thailand as well as participate in the Kingdom’s natural-gas distribution as soon as the Thai Energy Regulatory Commission (ERC) opens up the industry.
ERC member Pallapa Ruangrong said earlier that Thailand is drafting the regulations governing competition in the natural gas trade, which will be submitted for consideration by the middle of the year.
The Nation, Thailand’s English daily newspaper, said the regulations would guarantee fair competition in the country since Thailand’s state-owned oil and gas company, PTT, has dominated the industry.
The regulations will level the playing field among domestic and foreign companies by setting just one fee for natural gas transmission and one for storage at Thailand’s LNG terminal. It also will allow domestic power plants and other industrial customers free choice in choosing their gas supplier.
This latest disclosure comes as Thailand grapples with dwindling natural gas reserves which are projected to last just ten more years, forcing the Southeast Asian nation to secure as many natural gas suppliers as possible.
Running out of Gas
However, part of Thailand’s gas problems stem from oil. Imports make up a significant portion of the country’s oil consumption, according to the US Energy Information Agency (IEA). Thailand is the second largest net oil importer in Southeast Asia, after Singapore.
Trying to mediate the effect of swings in the global oil market, Thailand has turned to natural gas, which accounts for nearly a third of the country’s total energy consumption mix.
However, like Indonesia, the Philippines and Vietnam, Thailand’s economy is expanding, and as a result so is its natural gas consumption and depletion of its gas reserves.
The Asia Pacific Energy Research Centre (APERC) states that natural gas will be the most rapidly growing primary energy source in Thailand, at an average rate of 4.4 percent per year from 2010 to 2025. The APERC adds that Thailand’s limited gas production will require imports to expand nearly four-fold, from 7.5 million tons oil equivalent (Mtoe) in 2009 to 27 Mtoe in 2035.
Thailand’s Energy Ministry expects gas production to peak in 2017. The country produced 1,360 billion cubic feet (bcf) of natural gas and consumed 1.645 bcf in 2011, resulting in 340 bcf of net imports.
Seeking a Solution
Thailand’s solution to its impending gas shortage is multi-faceted. For starters, the company is trying to beef up its oil and gas exploration and production (E&P) endeavors, trying to slow declines in mature fields, and promoting exploration of technically challenging fields through licensing rounds.
And, like other countries in the Asia-Pacific region, Thailand hopes to tap into massive US shale gas deposits.
The country is in the process of joining the Trans Pacific Partnership (TPP), which currently includes the US, Australia, Brunei, Canada, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Earlier this week Japan voiced its interested in joining the TPP, also eyeing possible shale gas deals with the US.
If Thailand can join the TPP, it will be in a position to buy North American gas, which sells around three to five times less than gas bought on the Asian LNG spot market.
Yet, nothing happens in Southeast Asia without its share of political fallout. Thailand’s gas dilemma is no exception.
While government planners work diligently to plug in workable variables in the country’s energy equation, other factors than just deplenishing reserves and consumption increases are at work. Anti-gas, anti-nuclear, anti-hydropower and a host of other anti groups are fighting back.
In April, Myanmar will temporarily stop shipping natural gas to Thailand while it repairs drilling rigs at its gas fields. The shutdown, according to The Nation, will decrease Thailand’s 32,000 megawatts (MW) of power production capacity by 6,000 MW, resulting in a gap in supply and demand. Though the government states that it will fire up old plants to meet the temporary shortage, anti-gas groups are using the situation to sway public opinion against imported gas.
But imported gas is not their only agenda; they are also against domestic oil and gas production as well. Bowing to public pressure last year, Thailand’s Department of Mineral Fuels (DMF) delayed the launch of its 21st licensing round, set for January 2012, effectively ensuring that Thailand will deplete its gas reserves.
According to NNT (National News Bureau of Thailand), the country’s DMF Director-General Songpope Polachan said on February 25 that the 21st round of petroleum concession granting is expected to take place in the middle of this year.
He added that his office “will relay the situation of the country’s energy demand to the public, emphasizing on the declining energy reserve sites and the expectation that natural gas reserves in the Gulf of Thailand will be depleted in 10 years.”
The licensing round includes 22 blocks, 11 that are located onshore in the country’s northeast region, 6 in the onshore North-central region, and 5 in shallow offshore waters in the Gulf of Thailand.
Anti-gas groups are also calling for energy diversification, pointing to renewable energy power plants, co-generation, combined cycle power plants, thermal plants and even nuclear power.
However, there is another rub: Thailand’s anti-nuclear lobby. Last year the country’s Science and Technology minister announced a plan to push through with a nuclear research rector project. Yet, it sparked controversy as well, possibly delaying or postponing the plan.
If Thailand’s masses don’t want natural gas or oil, and give a thumbs-down on nuclear power, it will make the work for Thailand’s energy planners increasingly problematic as they try to figure out the country’s energy future.
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