Monday, October 29, 2007

Thailand's PTTEP and Chevron to boost production

PTTEP and Chevron to boost production


The country's two major natural gas producers will increase output by 660 million cubic feet per day (mmcfd) in total after the Energy Ministry granted them 10-year production extensions.

The Department of Mineral Fuels formally signed the agreement yesterday to extend the concession for PTT Exploration and Production Plc (PTTEP) and Chevron Thailand Exploration and Production.

The extension for PTTEP covers Blocks 15, 16 and 17 in the Bongkot field in the Gulf of Thailand, which are expected to produce an additional 330 mmcfd starting from 2011.

In addition, Chevron plans to lift its output by 330 mmcfd under a 10-year extension from 2012-22 for Blocks 1, 11, 12 and 13 of the Platong field, also in the Gulf.

Energy Minister Piyasvasti Amranand expects new investment capital committed during the extension period for the seven blocks to total US$15 billion.

Both operators agreed to pay an additional $1.23 billion to the government, including a royalty fee of 12.5% of product value and corporate tax of 50%.

The ministry is now in the process of holding its 20th bidding round for natural gas exploration and production concessions in the country's 56 onshore blocks and nine blocks in the Gulf of Thailand.

The round, which began in May, is scheduled to run until May 2008.

PTTEP president Maroot Mrigadat said the company's partners included Total E&P of France and British Gas Asia Pacific, both of which had agreed to invest at least $1 billion for the first phase of the South Bongkot field for exploration. PTTEP has set aside a total budget of $3 billion for the whole concession period for South Bongkot.

The company is now pumping 630 mmcfd from the North Bongkot field. The concessions for these fields had been due to expire in 2012, but the government decided to review the concession extension five years early due to the state's commitment to support long-term investment.

Chevron Thailand Exploration and Production's strategic partners in the block include Mitsui Oil Exploration and PTTEP. Tara Tiradnakorn, the company's president, said a significant investment was needed to create opportunities for further offshore development to increase recoverable reserves.

Chevron boasts total average daily production of more than 144,000 barrels of oil and condensate and natural gas of 1,600 mmcfd. It is proceeding with its $4 billion investment plan, accounting for around 20% of its Asia Pacific investment in upstream and downstream businesses this year.

PTTEP shares closed yesterday on the Stock Exchange of Thailand at 170 baht, up one baht, in trade worth 3.6 billion baht.

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