Exploration Spur Expectations For 21st Licensing Round
BMI View: We have maintained a pessimistic forecast for Thailand's hydrocarbon sector over the past year due to failure of the government to promptly address key issues with regard to environmental regulation and wealth distribution. However, data from exploration activities in early 2013 and a pick - up in exploration activity in July support a view that Thailand may be able to overcome these above - ground hurdles. The 21 st licensing round, which was to be launched in mid -2013 but has yet to materialise, will provide a strong test of investor confidence in the country's credentials.
We have expressed concerns about Thailand's ability to maintain production growth through our ten-year forecast period from 2013 to 2022. Among several issues we see three main features that could constrain the country's below - ground potential:
Growing offshore oil and gas exploration has fuelled concerns about its threat to Thailand's tourism industry. Environmental risks associated with such activities have increased demand s for tighter regulations going forward.
Concerns about the taxation and redistribution of hydrocarbon revenues, supported by the country's academic community , bolstered objection by the population against the current production sharing system.
Weakening regional demand has pushed companies such as PTTEP to reduce investment in various projects, including some involving domestic production. (see ' Delays Loom As PTT Adjusts To Economic Fundamentals ' , July 11).
Successive postponement of a proposed 21 st licens ing round, along with exploration delays by companies awarded exploration rights in the 20 th round , underpins our view that Thailand's gas production could flatten around 40b n c ubic m etres (bcm) by the end of the decade, while liquid s production w ould continue to slip downward over the forecast period.
|Above-Ground Hurdles Imposes Output Ceiling|
|Thailand's Oil (LHC) & Gas (RHC)Consumption, Production & Net Exports|