Interview : Piyasvasti Amranand

How do you expect the Energy Reform plan to impact upstream and midstream competition?

PIYASVASTI AMRANAND: In most countries liberalisation happens first in the power industry, followed by the gas industry. In Thailand, however, it seems to be the other way around. Although the Energy Reform plan was drafted in 2017, the framework remains unclear. Focusing on gas liberalisation, the plan does not provide details or a timeline for the power sector. What we do know is that the government wants to see competition in the industry, with PTT granting third parties access to its pipeline network to import and distribute gas, resulting in PTT losing its monopoly on both the import of liquefied natural gas (LNG) and access to the gas supply. However, the reality is that PTT already allows third-party access to onshore pipelines, we just don’t allow third-party access to the offshore one. That said, nothing is preventing others from finding the opportunities to import and sell LNG. We welcome competition, but it must be done in a way that benefits consumers, not just certain players, as that would be unfair to consumers.

Given the decline in domestic oil and gas reserves, and the shift towards renewable energy, what role will fuels play in the energy mix?

PIYASVASTI: We cannot rely entirely on non-firm power, and as fossil fuels are a source of firm power, they will continue to play an important role. A large portion of renewable energy is non-firm, such as solar and wind. This will remain the case until the price of batteries lowers substantially enough to make wind or solar cost competitive with fossil fuels.

In addition, the combination of both climate change and resistance from local people should encourage the government to move away from coal as a power source as it has no future in Thailand. The Electricity Generating Authority of Thailand has not been able to build a single local coal-fired power plant since the Mae Moh project began in 2015. I was not surprised when the proposed plant in Krabi was put on hold, because it seems somewhat unfeasible to build a plant in such a tourism destination.

In the medium term gas will continue to be the most important fuel for the economy, until the share of renewables increases. With relatively low production costs, competitive long-term contracts and the benefits of carbon credits, LNG continues to be more attractive than coal for power generation.

To what extent should Thailand be concerned about future gas shortages, and what measures are being taken to ensure its supply?

PIYASVASTI: At the moment, 30% of our gas is imported from Myanmar, 5% is imported LNG and the remaining 65% is extracted from the Gulf of Thailand. However, the supply from Myanmar will soon be declining as they will not be renewing existing gas supply agreements due to their domestic generation demands. Fortunately, there is a surplus of LNG in the market.

What concerns us most is the government’s policy regarding the gas concession in the Gulf of Thailand. Currently operated by Chevron, their concession is set to expire in 2022. The majority of Thailand’s gas supply comes from here, and although the Ministry of Energy is in negotiations, the auction has been delayed more than once and the outcome remains unclear.

It is not important whether PTT Exploration and Production wins or loses this concession. The most important thing is that the government ensures a continuity of supply. If this does not happen there will be an energy shortage and we will have to import LNG or use more fuel, both of which would be costly. Although PTT will be able to ensure a sufficient supply of gas by importing more LNG, it would only be an interim solution. The potential shortfall of ethane, butane and propane production would result in a shortage of raw materials for the petrochemicals industry, thereby impacting Thailand’s overall economic development.