Thailand’s PTT Exploration and Production Public Co. Ltd. has won the production and development rights for the Erawan and Bongkot petroleum concessions in the Gulf of Thailand, Energy Minister Siri Jirapongphan said on Dec. 13.
A joint bid for the Erawan (G1/61) concession from PTTEP and its partner, the UAE’s Mubadala Petroleum, won out over a submission from Chevron (NYSE: CVX) and Mitsui Oil Exploration.
PTTEP will operate the Erawan concession with a 60% stake, while Mubadala holds the remaining 40%.
PTTEP also won with a solo bid for the Bongkot (G2/61) concession, beating out Chevron and Mitsui Oil.
“PTTEP has confidence in ensuring production and continuity in natural gas supply according to production sharing contracts,” CEO Phongsthorn Thavisin said in a statement. Winning the concessions would increase the company’s production and reserves in the long-term, he said.
This confirms PTTEP’s strategy to secure domestic gas supply and increase its reserves in the country, said Wood Mackenzie analyst Jean-Baptiste Berchoteau.
Together the fields have a combined output of 2.1 billion cubic feet a day (Bcf/d) of gas, government data shows. The concessions require the holders to maintain minimum daily volumes of gas at 800 MMcf and 700 MMcf, respectively, for the Erawan and Bongkot fields.
The government will take 68% of the production profits from Erawan and 70% from Bongkot, the energy ministry said in a statement.
Chevron Corp.’s Thai unit currently operates the Erawan gas block and state-backed PTTEP operates Bongkot. These concessions for the gas fields will expire in 2022 and 2023, respectively.
Chevron Thailand Holdings said in an emailed statement that it was deeply disappointed it was not the preferred bidder for the two blocks.
“Chevron submitted credible, sustainable bids built on our deep experience operating in the Gulf of Thailand ... [and] allowed for the necessary investment to maximize recovery of Thailand’s resources,” it said.
It added, however, that the company respected the decision of the Thai government and remained committed to delivering energy to the Southeast Asian nation.
Woodmac’s Berchoteau noted that this is the second major loss for Chevron in Southeast Asia after it lost its Rokan asset to state energy company Pertamina in Indonesia earlier this year.
“Chevron’s reserves and production in the region are now expected to fall drastically post-2022 and Southeast Asia could become a non-core region for the major,” Berchoteau said.
The new production sharing agreements are expected to be signed in February 2019, the statement said.
Both concessions are for 20 years with an option to extend for another 10 years, a ministry official said.
Recommended Reading
EIA: Oil, Gas Output to Fall Across Lower 48 in February
2024-01-18 - Daily oil and gas output is forecasted to decline from shale basins across the Lower 48 in February—except from the mighty Permian Basin, according to new Energy Information Administration figures.
Exclusive: Chevron Balancing Low Carbon Intensity, Global Oil, Gas Needs
2024-03-28 - Colin Parfitt, president of midstream at Chevron, discusses how the company continues to grow its traditional oil and gas business while focusing on growing its new energies production, in this Hart Energy Exclusive interview.
US Expected to Supply 30% of LNG Demand by 2030
2024-02-23 - Shell expects the U.S. to meet around 30% of total global LNG demand by 2030, although reliance on four key basins could create midstream constraints, the energy giant revealed in its “Shell LNG Outlook 2024.”
ARC Resources Adds Ex-Chevron Gas Chief to Board, Tallies Divestments
2024-02-11 - Montney Shale producer ARC Resources aims to sign up to 25% of its 1.38 Bcf/d of gas output to long-term LNG contracts for higher-priced sales overseas.
Midstream Builds in a Bearish Market
2024-03-11 - Midstream companies are sticking to long term plans for an expanded customer base, despite low gas prices, high storage levels and an uncertain political LNG future.