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Thailand to ease concession terms

By an OGJ correspondent

BANGKOK, Mar. 15 -- Thailand wants to make its participation terms more attractive to international producers and might cut royalty and income taxes in a bid to promote oil and gas production from marginal wells.

The proposal followed a recent finding by Chulalongkorn University (CU) that terms provided by the Thai Petroleum Act of 1971 and five amendments are not attractive enough to encourage new exploration and production.

The basic regime under Thailand's concession system, with 12.5% royalty and 50% income tax, was viewed as stringent in comparison with production-sharing terms offered by neighboring countries such as Viet Nam.

The Thai Energy Ministry commissioned CU, in collaboration with overseas legal experts, to study possible amendments and develop recommendations by yearend.

Ministry officials hope that amended terms, expected to be in place next year, would improve the economics of several marginal fields, including Pearl Energy Pte.'s idle Busabong gas and condensate field in the Gulf of Thailand.

They said relaxed terms would raise recovery factors and reserves, estimated at yearend 2004 by the Department of Mineral Fuels at 14.754 tcf of natural gas, 319 million bbl of condensate, and 291 million bbl of crude oil. Average production last year rose to 509,402 boe/d from 471,790 boe/d in 2003.

As of last month, Thailand had issued 43 concession blocks, including 26 in the gulf and 17 onshore.


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