Thailand’s PTT Exploration and Production Public Co. Ltd. has won the production and development rights for the Erawan and Bongkot petroleum concessions in the Gulf of Thailand, Energy Minister Siri Jirapongphan said on Dec. 13.
A joint bid for the Erawan (G1/61) concession from PTTEP and its partner, the UAE’s Mubadala Petroleum, won out over a submission from Chevron (NYSE: CVX) and Mitsui Oil Exploration.
PTTEP will operate the Erawan concession with a 60% stake, while Mubadala holds the remaining 40%.
PTTEP also won with a solo bid for the Bongkot (G2/61) concession, beating out Chevron and Mitsui Oil.
“PTTEP has confidence in ensuring production and continuity in natural gas supply according to production sharing contracts,” CEO Phongsthorn Thavisin said in a statement. Winning the concessions would increase the company’s production and reserves in the long-term, he said.
This confirms PTTEP’s strategy to secure domestic gas supply and increase its reserves in the country, said Wood Mackenzie analyst Jean-Baptiste Berchoteau.
Together the fields have a combined output of 2.1 billion cubic feet a day (Bcf/d) of gas, government data shows. The concessions require the holders to maintain minimum daily volumes of gas at 800 MMcf and 700 MMcf, respectively, for the Erawan and Bongkot fields.
The government will take 68% of the production profits from Erawan and 70% from Bongkot, the energy ministry said in a statement.
Chevron Corp.’s Thai unit currently operates the Erawan gas block and state-backed PTTEP operates Bongkot. These concessions for the gas fields will expire in 2022 and 2023, respectively.
Chevron Thailand Holdings said in an emailed statement that it was deeply disappointed it was not the preferred bidder for the two blocks.
“Chevron submitted credible, sustainable bids built on our deep experience operating in the Gulf of Thailand ... [and] allowed for the necessary investment to maximize recovery of Thailand’s resources,” it said.
It added, however, that the company respected the decision of the Thai government and remained committed to delivering energy to the Southeast Asian nation.
Woodmac’s Berchoteau noted that this is the second major loss for Chevron in Southeast Asia after it lost its Rokan asset to state energy company Pertamina in Indonesia earlier this year.
“Chevron’s reserves and production in the region are now expected to fall drastically post-2022 and Southeast Asia could become a non-core region for the major,” Berchoteau said.
The new production sharing agreements are expected to be signed in February 2019, the statement said.
Both concessions are for 20 years with an option to extend for another 10 years, a ministry official said.