Offshore staff
EDINBURGH, UK – Thailand has opened a bidding round for the offshore G1/61 and G2/62 blocks which cover the producing Erawan and Bongkot gas fields, operated respectively by Chevron and PTTEP.
Current combined production is 2.2 bcf/d, around 70% of Thailand’s domestic gas production. However, the existing concessions expire in 2022.
Interested parties must pre-qualify by the initial deadline May 28, with qualifying parties then given until Sept. 25. The awards should be announced by 1Q 2019.
According to Wood Mackenzie the blocks are being offered under a production-sharing contract (PSC) regime, a first for Thailand.
Key factors in the auction round are gas production, gas price and production share attributable to the government.
Bidders must commit to a minimum production of 800 MMcf/d for G1/61 (Erawan) and 700 MMcf/d for G2/62 (Bongkot) over a 10-year period from the PSC start date.
The analyst estimates that the maximum gas price available will be set at $7.5/MMcf in 2022, assuming a Dubai crude price of $68/bbl in 2022, with a minimum government production share of 50%.
Signature and production bonuses will also be biddable.
Wood Mackenzie estimates that the selected groups will need to spend $11 billion and $6.4 billion for G1/61 and G2/61 respectively from 2020, excluding decommissioning costs, in order to develop more than 6 tcf of gas resources.
Bidders would also need to consider decommissioning, resource risk and uncertainties over Thailand’s political environment.
Existing participants Chevron, PTTEP, MOECO, and Total are well placed to bid given their existing experience of the projects, the analyst added, although other players in the region such as Mubadala are likely to be interested, likewise local NOCs such as CNOOC or Petronas.
04/26/2018
