Thai state-controlled upstream firm PTTEP intends to continue primarily focusing on gas production as the energy transition cannot occur overnight, said its chief executive officer Montri Rawanchaikul.
Altering the energy system is too big a task to be conducted overnight, said Rawanchaikul at the Association of International Energy Negotiators' (AIEN) International Energy Summit in Bangkok on 12 June. Gas will continue to retain an important role for now as renewables are not yet a reliable source of energy, he added.
Hydrogen, for example, costs too much and is currently six times more expensive than LNG, and many countries do not have the infrastructure such as pipes for transporting it, Rawanchaikul said. The market outlook also remains uncertain as it is unclear who will buy hydrogen at such high costs, he added. PTTEP performs best at gas production, said Rawanchaikul, but the firm will also invest in the energy transition and is looking into solar power, green hydrogen and offshore wind farming.
PTTEP aims to sustain growth in oil and gas production to ensure domestic energy security and is still looking at production possibilities overseas. The firm has just signed a sales and purchase agreement with German firm Wintershall DeaMiddle East GMbH to acquire a 10pc participating interest in the Ghasha concession, which is one of the largest natural gas fields in the UAE. The concession is located offshore western Abu Dhabi and is set to produce more than 1.5bn ft³/d of gas before the end of the decade. The project will also capture 1.5mn t/yr of CO2, according to PTTEP.
But Thailand faces the issue of depleting domestic gas reserves and a decline in production from existing gas fields, said executive director of the Petroleum Institute of Thailand, Kurujit Nakornthap. This means less revenue and tax collection from the exploration and production business, he added.
This also means that Thailand is becoming increasingly reliant on imports of LNG at higher prices, said Nakornthap. PTTEP views Thailand as an import hub, said Rawanchaikul, with three corridors from which it takes gas — the eastern Gulf of Thailand corridor, the western corridor where gas arrives from Myanmar, and the southern corridor from which it receives gas from Malaysia's Petronas.
Carbon capture as solution
Gas is important but needs to be cleaner, said Rawanchaikul. Carbon capture and storage (CCS) should be viewed as a solution instead of immediately jumping to establish contracts for nuclear power, he added.
But there are four factors currently preventing the development of CCS, he said. The first is cost, as developing CCS can be expensive. Secondly, economies of scale are required, and this can only be achieved if there are incentives for CCS as well as a standardisation of carbon credits and carbon tax. The third is the environment or in PTTEP's case, environmental liabilities, he said. It remains uncertain what liabilities storing CO2 in the ground entails and there should be a standardisation of liability, he added. The last factor is regulatory frameworks as model contracts should be established, for which associations need to work together.
"Balancing the act of conventional exploration and production and energy diversification is to work with gas for the time being until we see [new forms of] energy that can replace oil and gas in an affordable range," said Rawanchaikul.
