By an OGJ Online Correspondent
BANGKOK, May 16 -- Thai Shell Exploration & Production Co. has clinched a new accord that cuts the price of natural gas it sells to the Electricity Generating Authority of Thailand (Egat) by almost one third.
The new agreement, reached by the local unit of Royal Dutch/Shell Group and the Thai state power utility, makes gas from Thai Shell's Sirikit oil field among the cheapest of all natural gas produced in the kingdom. Under the revised pricing formula, the parties agreed to fix the price of Sirikit associated gas at $1.30-$1.45/MMbtu with fuel oil as the reference.
The new pricing structure is in effect for 3 years retroactive to 1999 when the previous gas sale agreement expired. A senior Thai Shell executive said the new structure, setting the floor and ceiling for the onshore gas, will save Egat significant sums.
Under the previous pricing formula the price of gas would be $2.05/MMbtu, he said, noting Thai Shell is presently charging Egat $1.45/Mmbtu. The new pricing accord represents the second round of amendments to the original gas sale accord. Like the previous accords, there is no set amount of gas Thai Shell is obliged to deliver to Egat.
Thai Shell will use its "best" effort to ensure the flow required by Egat's Lan Krabue gas turbine power station. Thai Shell is delivering 45 MMcfd of gas from Sirikit field, in Kamphaeng Phet, about 400 km north of Bangkok. The associated gas has also been separated on site to produce 290 tonnes/day of LPG.
Meanwhile, Thai Shell and Egat have begun work on a permanent gas sale agreement to replace the "memorandum of intent" which has served as the basis for gas shipments.
Estimate of remaining proven reserves of crude in the Greater Sirikit field at the end of last year were increased by 8.8% to 148 million bbls, while the reserves of associated gas were boosted 1.2% to 250 bcf (OGJ Online, Apr 16).
