The Petroleum Authority of Thailand (PTT) has asked to delay the purchase of incremental natural gas supplies from Myanmar's Yetagun field in the Gulf of Martaban due to a slowing of growth in Thailand's gas demand.
To avoid oversupply, PTT wants to defer taking 140 MMcfd of gas under the so-called second-phase supply agreement beyond the 2004 contract date by as many as 5 years, according to a PTT source. For the time being, anyway, PTT says it remains committed to taking 260 MMcfd of gas under the first-phase of the Yetagun supply agreement, due to start in mid-2000.
The Yetagun gas contract, entered into several years ago, was based on a pre-Asian-economic-crisis demand projection that envisioned Thai domestic demand for gas growing 13%/year during the next 5 years. But the economic turmoil that erupted in mid-1997 has adversely affected gas demand, especially that for power generation, prompting PTT to revise its growth projections to only 3%/year for the period and setting off speculation that PTT would be unable to take any Yetagun gas (OGJ, Feb. 8, 1999, p. 23).
PTT recently sought assistance from Thailand's industry ministry to help it negotiate with the Yetagun development group, led by Premier Oil PLC, London. PTT was seeking to amend the phase-two supply deal, and in particular waive the take-or-pay clause.
PTT has asked to waive the clause to avoid the same problem that arose from its failure to take delivery of gas from Yadana field, Myanmar's largest offshore gas field (OGJ, Aug. 30, 1999, p. 42). PTT and the group developing Yadana field, led by TotalFina SA, in 1999 resolved a dispute over payments caused by PTT's delay in taking contractual gas supplies. The group eventually agreed to accept a payment of $50 million. "If the ministry could help us delay the [Yetagun] procurement contract under the second phase by about 5 years, demand and supply would match by the end of that time," a PTT source said.
The Yetagun group, which includes Malaysia's Petronas and Japan's Nippon Oil Co., told Thai Industry Minister Suwat Liptapanlop last month that its $570 million field development plan and the laying of a 273-km pipeline to Thailand's western border in Kanchanaburi province are at an advanced stage. It reaffirmed that it is on course to start delivering Yetagun gas to PTT in April, as agreed. Proved reserves at Yetagun have risen from an estimate of 1.1 tcf to 2.92 tcf. The 165% increase, determined by DeGolyer & MacNaughton, came as a result of additional drilling.
