14 Jun 2024 | 03:20 UTC

INTERVIEW: Thailand's PTTEP to meet 2030 oil and gas output target following acquisitions, discoveries

Highlights

To focus on growing overseas production with existing partners

Gas to remain as a transitional fuel for the next 30-40 years

To consider lower emissions when developing overseas projects

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Thailand's PTTEP expects to produce close to 700,000 boe/d of oil and gas in 2024, and the output should climb to around 900,000 boe/d by 2030, following recent acquisitions and discoveries abroad, its Chief Executive Officer Montri Rawanchaikul said in an interview with S&P Global Commodity Insights.

For 2024's oil and gas output, about 60% will come from the Gulf of Thailand and neighboring countries such as Myanmar and Malaysia, while the remaining will be from overseas assets in countries like Oman and Algeria, Rawanchaikul said on the sidelines of the Association of International Energy Negotiators' (AIEN) International Energy Summit in Bangkok.

"This year we have a full capacity of running domestic production," said Rawanchaikul.

For instance, the company's G1/61 project hit peak production of 800 MMcf/d ahead of plan(opens in a new tab) earlier this year, while fields such as Bongkot and Arthit have been producing above contractual levels, said Rawanchaikul.

"There is demand in Thailand for gas and we have the spare capacity, so we go above the target," he said.

PTTEP's newly acquired stake in UAE's Ghasha concession(opens in a new tab) is expected to begin early production next year and will be ramped up in 2027-28, said Rawanchaikul.

Coupled with a series of discoveries in Malaysia(opens in a new tab) in recent months, Rawanchaikul expects these projects can help PTTEP to achieve its 2030 production target.

"But beyond [2030], I will say well, at least [output] will be sustained because we need to sustain our production," said Rawanchaikul, adding that the company is still drawing up a new strategic production target post-2030.

Overseas growth

The state-owned company's current priority is to grow output from its overseas assets, while maintaining domestic production to safeguard limited reserves in the Gulf of Thailand, said Rawanchaikul.

"I would say most of the Gulf of Thailand area has been explored, so we don't actually see more reserves," he said. "If there is any chance that we can go into a new area within the Gulf of Thailand, we will but internationally, we see the opportunity to grow where we have foothold."

PTTEP will focus on countries that it is already working with, although the company remains open to exploration and production opportunities in other countries.

Rawanchaikul said: "I would focus on Southeast Asia, I would focus on the Middle East -- two countries in the Middle East, particularly Oman and the UAE, and only selected countries in Africa."

"We do not want to jump into a new country where we don't understand how to work, and we don't have foothold, we don't know the infrastructure, we don't know the system."

In a decade from now, Rawanchaikul estimates that oil and gas produced from PTTEP's international assets will make up a majority 60% of the company's portfolio if the output grows as planned.

Gas focus

PTTEP will also continue to primarily focus on gas production due to its importance as a long-term transitional fuel, the CEO said. "Before we see a new form of [renewable] energy, we see gas can be a transitional fuel, at least for the next 30, 40 years."

Thailand's power sector is largely reliant on gas, and as sectors such as transport moves from fuel engines to electric ones, Rawanchaikul expects gas to continue playing an essential role in the country's energy mix.

Faced with depleting domestic gas reserves, Thailand currently imports about 30%-40% of its total gas supply using LNG. Of which, around half of these imports are contracted while the remainder are bought in the spot market, which will be impacted by fluctuations in LNG prices, said Rawanchaikul.

However, the price of gas produced by PTTEP is not exposed to such fluctuations as it is tied to long-term contracts that are linked to oil prices, foreign exchange rates and inflation.

PTTEP expects crude oil prices to remain stable between $70/b and $90/b for 2024, similar to 2023.

"Oil prices can be predicted for the next few years because of the balance of demand supply and OPEC control. But gas [price] is very difficult to predict, particularly on LNG," said Rawanchaikul.

Carbon capture

Carbon capture and storage will be a key solution in reducing upstream emissions in the meantime, however, Thailand still lacks a regulatory framework and incentives to make CCS commercially viable, said Rawanchaikul.

PTTEP is currently trialing CCS at its Arthit field by injecting CO2 from gas production into depleted reservoirs. If the pilot takes off, PTTEP has its eyes on a potential sink area in Northern Gulf of Thailand which can hold up to 40 million mt/year of CO2, he said.

In the meantime, PTTEP will consider a project's potential for lower carbon emissions when acquiring or growing them overseas, said Rawanchaikul.

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