The Energy Ministry has ordered PTT Plc, the national oil and gas conglomerate, to study the feasibility of liquefied natural gas (LNG) imports from spot markets in order to take advantage of lower prices.
Energy Minister Sontirat Sontijirawong said LNG prices in the global spot market have declined to an average of US$4-5 per million British thermal units (BTU) when compared with gas production in the Gulf of Thailand and gas imports from Myanmar.
“If PTT can import LNG at these lower prices, the ministry will reduce offshore gas production temporarily,” he said. “This plan would extend the life cycle of gas resources in the Gulf of Thailand.”
The country’s gas production now has an average volume of 3,400 million standard cubic feet per day (MMSCFD), largely from the Erawan and Bongkot gas fields in the Gulf of Thailand (2,200 MMSCFD).
PTT imports roughly 5 million tonnes of LNG a year. All shipments are handled under long-term purchasing contracts.
PTT also operates the LNG receiving terminal in Rayong at a capacity of 11.5 million tonnes and is building a second terminal in the same province with a capacity of 7.5 million tonnes, scheduled for operation in 2022.
Mr Sontirat said the study will be considered with caution and with an eye towards integration with the country’s gas supply.
“It will bring the possibility of a regional LNG trading hub, which the ministry plans to promote in the third quarter of 2020,” he said.
The study will affect existing purchasing contracts that PTT has made with the Electricity Generating Authority of Thailand (Egat), the largest gas purchaser under a global daily contract quantity.
The government allows free trade of LNG, and Egat is the second agency to handle LNG shipments.
Egat began importing LNG of 130,000 tonnes in late December. The shipment process will be completed in April.
There are also three companies planning to be LNG shippers: B.Grimm Power, Gulf Energy Development and Ratch Group.
LNG prices in spot markets in Asia and the US hit their lowest level in four years last week, below $4 per million BTU, due to ample gas supply.
Moreover, the winter season in northern Asia is milder than usual, resulting in lower gas demand.
