H.E. Mr. Viset Choopiban, Minister of Energy, to day presided over the gas purchase agreement signing ceremony for Phu Horm Field between the buyer (PTT Plc) and the group of sellers,consisting of Amerada Hess (Thailand) Ltd., APICO LLC, ExxonMobil Exploration and Production Khorat Inc., PTT Exploration and Production Plc. The gas will be used to fuel Nam Phong Power Plant, operated by EGAT Plc.
PTT was represented by its President, Mr. Prasert Bunsumpun, signing an agreement with the sellers by Mr.Malcolm Maclean, Vice President Production, SE Asia, Amerada Hess Mr. Quentin Rigby, General Manager, APICO LLC, Mr. Yongyot Harnsuvanich, Vice President, ExxonMobil Exploration and Production Khorat Inc.,Mr. Maroot Mrigadat, President, PTT Exploration and Production Plc.
Minister Viset remarked that the development of this Northeastern gas field is critically important, as it will add to the long-term security of power supply of this populous region.
“Gas production from Phu Horm will augment the volume currently supplied by the ageing Nam Phong Field, which is being depleted. Phu Horm gas will become the main fuel for Nam Phong Power Plant in the years ahead,” said the minister. “Besides displacing diesel in power generation, the gas supply will keep the power plant running at capacity, thereby maximizing its efficiency and reducing the power generation unit cost.”
It is possible that more gas will be discovered at Phu Horm and its vicinity, which implies greater benefit for Thailand because this is an indigenous fuel, it saves foreign currency payment for displaced oil imports, and it creates excellent opportunities for economic development in the Northeast — in both the power and the industrial sectors, which include the use of natural gas and NGV in the transport sector.
The PTT President touched on the essences of the agreement by saying the preliminary gas reserves amounted to some 550 billion cubic feet (Bcf) and about 500 barrels of by-product condensate would be produced each day. Gas delivery could start as early as April 2006, depending on the actual commissioning dates of gas production equipment and gas transmission pipelines, but no later than November the same year.
“We expect gas delivery of around 80 million standard cubic feet a day (MMSCFD) at the initial stage, on top of the current Nam Phong gas supply. With a combined gas supply of about 135 MMSCFD, EGAT can raise the efficiency of power generation at Nam Phong. Gas supply from Phu Horm is due to rise in stages to 108 MMSCFD, depending on the dwindling supply from Nam Phong Field (operated by ExxonMobil). In short, we design for the total gas supply to keep the power plant running at full capacity,” said Mr. Bunsumpun.
Gas pricing conditions and structures resemble those of other gas purchase agreements, with 13-20% price discounts corresponding to cumulative purchase volumes. The maximum rate of discount applies once the cumulative purchase volume exceeds 498 Bcf. “The price structure will enable Nam Phong Power Plant to remain competitive,” added Mr. Bunsumpun.
In the future, if the sellers find additional gas reserves, PTT will receive further gas price discounts. For the life of the agreement, the estimated value of the gas amounts to 31.1 billion baht, assuming the average fuel oil price of $30 per barrel at the exchange rate of 40 baht per dollar.
As a national energy agency in charge of security of supply, PTT plans to secure gas supply to meet the needs of domestic users in a timely manner and at suitable prices. Besides constantly securing natural gas supply from new sources, PTT has expanded its gas transmission pipeline capacity of both the western and eastern systems. This is in response to the government’s policy of using indigenous energy for power generation, industries, and transport in the face of continued high oil prices; it also saves foreign currency payment for imports.