From Bangkok Post :

Dependent on Burma for our gas

BOONSONG KOSITCHOTETHANA

Like it or not, Thailand does not have the luxury of pulling out of the oil and gas sector in military-ruled Burma, as advocated by activists in the wake of the bloody crackdown on peaceful demonstrations two weeks ago.

Thailand is facing a dilemma. While it frowns on the repressive Burmese regime, it has little choice but to be on good terms with them when it comes to natural gas supplies. The kingdom is and will remain heavily reliant on gas delivery from its western neighbour, particularly from the fields in the Gulf of Martaban, to meet its growing appetite for gas, needed for power generation. By 2012, Thailand will need to raise its gas supply by roughly 2 billion cubic feet (Bcfd) from 3 Bcfd currently.

Thailand's power demand is projected to grow by 5-6% a year, or an average of 1,400 MW a year. Thailand's most recent peak power demand registered on March 28 was at 21,896.4 MW.

Burma's proven gas reserves, at 19 trillion cubic feet at the end of 2006 according to the BP Plc, offer sizable energy supplies for Thailand than other possible indigenous and overseas sources currently identified. Furthermore, natural gas from the offshore Burmese fields offers good economic value and security of supply for Thailand.

The Burmese gas is of relatively good quality, competitively priced at least when compared to other overseas sources; being closer to us, it can be economically and securely piped to us for an extended period of over 20 years.

Other gas imports, in the form of liquefied natural gas (LNG), from Iran now under negotiation, will be at least twice as expensive as the Burmese gas when it reaches the shores of Rayong in 2012. LNG supplies from other sources such as Algeria, Australia, Qatar, Egypt and South Africa are no less costly.

Meanwhile, the chance of finding any more sizable gas reserves in the Gulf of Thailand is limited, while there are uncertainties about securing substantial gas supplies from neighbouring countries including the huge Natuna gas field in Indonesia.

To bring to Thailand the Natuna gas, which is inferior to the Burmese gas due to its high carbon dioxide content (70%), a 2,000km pipeline needs to be laid at a cost of more than 100 billion baht, thus raising the question of economic viability for such an undertaking.

For these very reasons, which Burma knows very well, Thailand has to close one eye to the human right abuses and continue to engage in petroleum development in Burma, which activists say is providing funding for a repressive regime. Burma has been an important source of gas supply for Thailand for more than eight years now, with the offshore Yadana and Yetagun fields, in which Thailand's PTT Exploration & Production Plc has a stake, delivering about about 1 Bcfd, representing over 20% of the kingdom's current gas supply.

In fact, Burma would not really care if the Thai state-controlled energy firms PTT Plc and its exploration arm PTTEP, opt out from its gas scene, in the knowledge that companies from other countries including China, Burma's staunchest diplomatic protector and largest trading partner, and India are keen to take Thailand's place.

There are also firms from South Korea and other countries jostling for access to the country's hydrocarbon reserves to feed their growing thirst for energy.

In spite of the economic sanctions, several foreign oil firms are active in Burma _ nine are engaged in 16 onshore blocks, another nine international energy groups are operating in 29 offshore blocks.

There is no easy solution out of this dilemma for Thailand, which has no one but itself to blame for becoming too dependent on natural gas, which generates over 70% of all electricity. This reliance on gas for power generation could balloon to as much as 90% if the country does not seriously engage in conservation and continues to shun alternative energy such as coal-fired plants and nuclear power, which are being vigorously opposed by eco-activists.

Any move to curtail current and future gas supplies from Burma needs to be carefully considered, as it could jeopardise Thailand's energy lifeline.

Also, Thailand will need to play a balancing act between its economic interests, and politics which are sensitive to the global community's views regarding Burma.

Boonsong Kositchotethana is Deputy Assignment Editor (Business), Bangkok Post.