PTT pressures suppliers to ease gas sales terms

By an OGJ Online Correspondent

BANGKOK, May 7 -- The Petroleum Authority of Thailand (PTT) is pressuring gas suppliers, both at home and in Myanmar, to ease established sales terms.

The Thai gas distribution monopoly wants producers to reduce gas prices and minimum supply quantities to correspond with the slowdown in demand and in the economy.

PTT attempted to change contracts with suppliers a year ago and met with strong resistance from suppliers.

The latest move is a reaction to public outcry about high energy prices. Power tariffs have soared 11.1%, largely due to a 20% jump in gas price. Natural gas, mostly from the Gulf of Thailand and Gulf of Martaban, is used to generate about 60% of the nation's electricity.

Prasert Bunsumpun, PTT Gas president, said contracts are outdated and some are based on unrealistic pricing indices. Most of the contracts covering supplies from Yadana field in Myanmar are under negotiation, as are contracts PTT has with Thailand producers such as Unocal Corp., Chevron Corp., and PTT Exploration & Production Co. Prasert said the average gas price is expected to increase to 140 baht ($3.11)/MMbtu in the third quarter of this year from 130 baht now.

Anon Sirisaengtaksin, deputy president of PTT Gas, stated that there would be an oversupply of gas if no changes were made to cut the minimum daily contract quantity commitments in the contracts with producers. PTT is concerned about "take-or-pay" costs involved in those contracts.

Meanwhile, PTT has urged the Electricity Generating Authority of Thailand to use more while PTT will promote the use of gas in industries as well as vehicular fuel in the form of compressed natural gas.