Thailand Awaiting Final Approvals on 24th Bid Round for Offshore Gulf of Thailand Exploration and Productions Licenses

February 28, 2022

Thailand Awaiting Final Approvals on 24th Bid Round for Offshore Gulf of Thailand Exploration and Productions Licenses

On February 9, 2022, the Director-General of the Department of Mineral Fuels (DMF) stated that the DMF is planning to request that the Deputy Prime Minister and the Minister of Energy sign an invitation to open bids for Petroleum Exploration and Production Licenses in the Gulf of Thailand for the first time in 15 years.

The DMF’s Chief Department expects that this auction, which will cover three offshore areas, could increase Thailand’s petroleum reserves, and it could lead to the possible discovery of new sources of petroleum for Thailand, which would boost the country’s energy resources, and reduce losses from energy imports.

The plots in the Gulf of Thailand that will be auctioned in the 24th bid round are as follows:

Plot No. G1/65 with a total area of 8,487 square kilometers. This area is divided into 2 sub-areas: Area A totaling 8,298.49 square kilometers, and Area B totaling 188.71 square kilometers;
Plot G2/65 with a total area of 15,030 square kilometers; and
Plot No. G3/65 with a total area of 11,646.67 square kilometers. This area is divided into 2 sub-areas: Area A totaling 11,028.22 square kilometers, and Area B totaling 618.45 square kilometers.

Generally, Thailand initiates its concession and production sharing contract process with the announcement of an exploration area or a plot in the Government Gazette. Thereafter, the DMF Committee will consider and announce the invitation, so that private sector firms can submit their applications to receive respective rights. The DMF’s sub-committee will consider the applications by:

checking the qualifications stipulated under Section 24 of the Petroleum Act;
assessing the suitability of the exploration project; and
determining the benefits which are offered by the applicant.

After considering the requests, the DMF’s sub-committee will consider the petroleum laws and regulations, before submitting the matter to the Petroleum Committee—under the supervision of the Ministry of Energy—and the cabinet for their consideration. If the application receives approval from the cabinet, the Minister of Energy will grant the rights to the applicant.

Other essential processes must also be conducted including an area survey, providing details relating to the production, and requesting the production area. As Thailand remains in the midst of a Covid-19 outbreak, it has been difficult for interested investors to travel to Thailand to inspect the areas and carry out these processes. Therefore, the earliest timeline for production to commence will possibly be 2026.

In spite of these challenges, Thailand still aims to complete the selection of bidders as soon as possible in order to boost natural gas supply—not least because the country has recently seen current domestic capacity fall short of the country’s demand for natural gas.

Related Professionals

Nithiya Phumejitpakdee

Thailand

+66 2056 5555

Email

Joseph Tomkiewicz

Thailand

+66 2056 5555

Email

RELATED INSIGHTS

January 25, 2023

New Competition Regulations for Thailand’s Energy Sector

Thailand’s Energy Regulatory Commission (ERC) has issued four new regulations under the Energy Business Act B.E. 2550 (2007) setting forth competition regimes to control both anticompetitive conduct and market structure in the energy business sector. The regulations were published in the Government Gazette on December 19, 2022, and took effect the following day. The key provisions of these ERC competition regulations largely mirror those articulated in the Trade Competition Act B.E. 2560 (2017) and its subordinate legislation. The most significant features of these competition regulations are summarized below. Market Definition Regulation The ERC’s market definition regulation (officially the ERC Regulation re: Market Definition and Relevant Market of Related Energy Services B.E. 2565) outlines the general framework for defining relevant markets in the energy sector. The factors to be taken into consideration include types of energy licenses, geographical areas, competition conditions, and interchangeability of energy services. In the annex to this regulation, the ERC has classified the relevant energy service markets as follows: Power business activities include power generation, power transmission system services, power distribution system services, power distribution services, and power system control services. Natural gas business activities include natural gas transmission through pipelines via natural gas transmission systems, natural gas procurement and wholesale via natural gas distribution systems, natural gas retail via natural gas distribution systems, and storage and regasification of liquefied natural gas. The ERC will review its market definitions and relevant energy service markets from time to time, taking into account changes in technology and competition conditions as well as feedback from public hearings. Market Dominance Regulation Under the ERC’s market dominance regulation (officially the ERC Regulation re: Criteria on Business Operator having a Market Dominance B.E. 2565), the ERC is empowered to proactively determine and declare which license-holding energy business operators have a dominant position

August 31, 2022

Thailand’s Draft Climate Change Act

Thailand’s Draft Climate Change Act Countries around the world have given significant attention to climate change legislation, with many national, regional, and global attempts to slow the momentum of climate change. The most notable of these multilateral efforts is the Paris Agreement, a legally binding international treaty on climate change currently adopted by 193 parties. Its goal is to limit the global average temperature to well below 2°C (preferably below 1.5°C) above preindustrial levels, and the treaty’s coordinated efforts to combat climate change are much more ambitious than previous global agreements and discussions. Article 4 of the Paris Agreement requires countries to provide “nationally determined contributions” (NDCs), consisting of their action plans for climate action. Thailand, as a party to the Paris Agreement, has put forth an NDC that pledges to achieve an unconditional greenhouse gas (GHG) emission reduction target of 20% from the business-as-usual projection for 2030, with the possibility of increasing that target to 25% subject to adequate and enhanced access to technology development and transfer, financial resources, and other support. To enable the accomplishment of this pledge, Thailand is looking to enact climate change legislation that functions as a key mechanism for domestic climate action. In 2018, the Office of Natural Resources and Environmental Policy and Planning (ONEP) under the Ministry of Natural Resources and Environment was assigned to prepare a draft Climate Change Act. The draft is now complete, and according to news reports it is set to be submitted to the cabinet for further consideration. The draft Climate Change Act lays out Thailand’s action plan for climate change mitigation and adaptation, including emissions reductions. Some of the key sections in the draft law involve citizen rights, the National Climate Change Policy Committee, and a national GHG database. Rights of Citizens The draft establishes the

August 26, 2022

Thailand Extends Reduction of Import Duties on Battery Raw Materials

Thailand’s Board of Investment (BOI) has extended its previously announced period for reduction of import duty on imported raw and essential materials for battery manufacturing for electric vehicles and other applications. The BOI’s announcement No. 5/2565 dated August 8, 2022, extended the reduction period to a maximum of five years. The BOI’s promoted activities list includes two battery-manufacturing business activities: Activity 4.8.3.1 – Battery manufacturing Activity 5.2.6.1 – High energy density battery manufacturing Qualifying battery manufacturers who have cell or module manufacturing processes are eligible for 90% import duty reductions on raw and essential materials that cannot be produced in Thailand. These reductions will be available on an annual basis, and are renewable for five years in total—up from the original two years. Existing projects (i.e., those which have the original two-year duration in their BOI certificate) can also benefit from the extension by preparing a project amendment form, along with a clarification letter and supporting documents, for submission to the BOI office. For more details on these customs duty reductions, or on any aspect of investment promotion in Thailand, please contact Charuwan Charoonchitsathian at [email protected] or +66 2056 5657, or Napassorn Lertussavavivat at [email protected] or +66 2056 5662.

August 16, 2022

Mechanism Proposed for Transitional Wind and Solar Projects in Vietnam

On July 21, 2022, Vietnam’s Ministry of Industry and Trade (MOIT) submitted Report No. 126/BC-BCT to the Prime Minister regarding the mechanism for transitional wind and solar power projects. In this report, the MOIT proposed some recommendations to explicitly address difficulties for outstanding wind and solar power projects (“Transitional Projects”) which have been developed under the Prime Minister’s Decision No. 13/2020/QD-TTg dated April 6, 2020, on the development of solar power projects (Decision 13) and Decision No. 37/2011/QD-TTg dated June 29, 2011, on the development of wind power projects (Decision 37), as amended by Decision No. 39/2018/QD-TTg dated September 10, 2018 (Decision 39). The Transitional Projects primarily include those which have completed construction but have not yet been put into operation, and those which have been put into operation but for which the power price has not yet been decided, due to missing the deadline set forth under the aforementioned decisions to be eligible for the feed-in-tariff (FIT). In particular, the MOIT has proposed the following key recommendations to the Prime Minister: Mechanism for Transitional Projects The MOIT proposes two options: Option 1: Developers of the Transitional Projects negotiate and sign power purchase agreements (PPA) with Vietnam Electricity (EVN) within the price framework issued by the MOIT in accordance with the Law on Electricity, the Law on Prices, and their subordinate guiding legislation; or Option 2: The Prime Minister formulates a new decision specifying the mechanism for bidding on the purchase of power produced by the Transitional Projects, estimated to be implemented for the time limit of three years and within the price framework issued by the MOIT. Mechanism for future wind and solar power projects The MOIT proposes to apply the mechanism that developers of future wind and solar projects negotiate the power price and sign the PPA

You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

Industries

Practices

February 28, 2022