Yetagun consortium refuses Thai rate request
After months of painstaking negotiations, the Yetagun gas developing group-led by Britain's Premier Oil PLC-continues to refuse Thailand's request to ease terms governing the Myanmar gas supply contract. The Yetagun consortium is supposed to receive a $70 million payment from PTT in March.
BANGKOK-After months of negotiations, the Yetagun gas development group-led by Britain's Premier Oil PLC-was continuing to refuse Thailand's request to ease terms governing the Myanmar gas supply contract.
The Petroleum Authority of Thailand (PTT) has sought to relax the Yetagun terms because the kingdom's natural gas demand has been growing at a slower pace than once expected, due in part to the mid-1997 economic crisis that restricted national energy demand growth.
Under the established take-or-pay contract, PTT was committed to buy up to 260 MMcfd of Yetagun gas between this year and 2004, when the rate is to ramp up to 400 MMcfd upon the second phase of field development is ready.
PTT has sought to change terms so that it will take delivery of 200 MMcfd of gas between this year and 2002, rising to 260 MMcfd after that to 2007, when the Thai outfit would be prepared to increase the rate to 400 MMcfd.
Thailand had decided it would be better off not declaring force majeure on the commitment to buy gas from Myanmar (OGJ Online, Aug. 24, 2000).
"It is extremely difficult to secure any leniency from the (Yetagun) group which is visibly irked with our request. They have insisted that we strictly conform with the contract," said a senior official of the Thai state energy enterprise.
The Yetagun group has made a major investment in the field development project, including not only the offshore production facilities but also the pipeline from the field to the Thai western border, the PTT official noted.
The Yetagun consortium is due ot receive a $70 million payment from PTT in March. The take-or-pay obligation means PTT is committed to pay for gas it has contracted to buy in full in March, though it has actually taken delivery of only part of the full volume.
The gas buyer can retrieve the gas volume it is unable to take in the first contract year in the following year. But since early this year, PTT only has been able to receive a fraction of the contractual volume of 260 MMcfd, partly because of the delay in the construction of the Electricity Generating Authority of Thailand's 3,645-Mw Ratchaburi power plant, being built with primarily to run on Burmese gas.
It was only recently when PTT has been able to raise the Yetagun delivery to about 120 MMcfd, most of which is going to Tri Energy Co.'s 700-Mw combined cycle power plant in Ratchaburi.
Premier has a 27% holding in the Yetagun project.