Thailand ‘Policy - · PDF fileThailand ‘Policy Sungkom Bunboon ... PTTEP Inter Oil 483 BPD EXXON Mobil Gas 33 MMscfd ... Excluded S1 gas. ENERGY, Bbtu/d. Demand Growth

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TThhaaiillaannd d ‘‘PPoolliiccyy

Sungkom BunboonSungkom BunboonSurachai SirijirapatanaSurachai Sirijirapatana

Department of Mineral Fuels (DMF)Department of Mineral Fuels (DMF)

FRAMEWORK ON PROMOTING PETROLEUM E&PFRAMEWORK ON PROMOTING PETROLEUM E&P

TopicsTopicsIntroducing the organizationIntroducing the organizationThailandThailand’’s Petroleum Concession Systems Petroleum Concession System

-- Land RegimesLand Regimes-- Fiscal RegimeFiscal Regime-- Benefits and ObligationsBenefits and Obligations

ThailandThailand’’s Petroleum Situations Petroleum Situation-- Petroleum Field & ProductionPetroleum Field & Production-- Pipeline Systems & GSPPipeline Systems & GSP-- Gas Business in Thailand Gas Business in Thailand -- Thailand Petroleum BalanceThailand Petroleum Balance

1919th th -- Round Concession Bidding (2005)Round Concession Bidding (2005)Summary & ConclusionSummary & Conclusion

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National Energy PolicyNational Energy Policy

To conserve, develop, and promote the efficientconsumption of energy, while balancing with indigenous natural resources and the environment, with ultimate goal to reduce the degree of reliance of energy imports.

The actions shall, therefore, be implemented by:• To promote the appropriate proportion of energy

consumption mix, as well as to promote natural gas as the fuel of choices

• To provide support on renewable energy initiatives• To position energy pricing scheme as to increase

competitiveness and productivity of the real sector

MOEMOE’’ss VisionVision

Being an efficient agent in supplying Being an efficient agent in supplying energy to the nation, developing and energy to the nation, developing and administering energyadministering energy--related activities related activities for sustainable development of for sustainable development of national economy and societynational economy and society

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Department of Mineral FuelsDepartment of Mineral FuelsDirectorDirector--GeneralGeneral

Office of the SecretaryOffice of the Secretary

Bureau of Petroleum Operations Bureau of Petroleum Operations and Coordinationand Coordination

International Petroleum International Petroleum Operations DivisionOperations Division

Deputy DirectorDeputy Director--GeneralGeneralSenior ExpertSenior Expert

Management System Development UnitManagement System Development Unit

Bureau of Petroleum TechnologyBureau of Petroleum Technology

Petroleum Planning DivisionPetroleum Planning Division

ThailandThailand’’s Petroleum s Petroleum Concession SystemConcession System

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Petroleum ConcessionPetroleum Concession

Concession System = Exclusive rights and obligations for petroleum operation under given areas for a specific given time period

- Found Petroleum belongs to the State- Concessionaires shall invest and absorball incurred risks

- Benefits to the state in form of petroleumroyalties and taxes

Concession Contract

• General Contract Term– State maintains mineral right, through ‘first right of refusal’

– Operating company requires to set up office in Thailand

– Biddable exploration work obligation

– Bonuses and state participation are voluntary

– Exemption from customs duties on good imported for petroleum operations

– Employment and training of Thai personnel

• Petroleum Income Tax– 50% of Taxable Profit

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Thailand Petroleum Act

• Special Law to promote exploration and exploitation of petroleum resources

• Activities under jurisdiction include– Exploration– Production– Transportation– Sale & Disposal

Land Regimes

Exploration Block:defined as announced in Gazette

– Onshore Block: not exceed 4,000 km2

– Offshore Block: DMF specifies– Maximum of 5 blocks and total acreage not

exceed 20,000 km2

– Deep Water Acreages are exceptional

Exploration Period :Exploration Period :3+3 year exploration periods + 3 years extendable

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Land Regimes

• Start from the end of exploration period provided that the production area was established

• Production may start in Exploration Period

• Production License Application (PLA)– Demonstration of Commerciality of Petroleum Wells– Production Plan shall be submitted to DMF within 120

days of PLA approval– Details include; Estimated Budget, Calculation of the

Reserves, and Production Rate

Production Period :Production Period :20 years production period +10 years extendable

Fiscal Regime

• Royalty & Tax Regimes

• 2 Groups

o Thailand I Regime: 1971-1981

o Thailand II Regime: 1981-1989 (outdated)

o Thailand III Regime: Post 1989

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Fiscal Regime: Thailand I• Government Take:

– Royalty flat 12.5%– Petroleum Income Tax 50%

• Expense before tax:– Royalty on exported oil– OPEX– Depreciation

• 5-yr straight line for tangible assets• 10-yr straight line for intangible pre-production assets

– Loss carry forward 10 yr max.

• Deductions after tax:– Royalty on domestically consumed petroleum– No carry forward for excess royalty deduction

Fiscal Regime: Thailand III• Government Take:

– Royalty• Sliding scale rates from 5-15% on gross revenue, based on

production

– Petroleum Income Tax 50%– Special Remuneration Benefit (SRB)

• Progressive rate from 0-75% on “Windfall Profit”

• Expense before tax– Royalty– SRB– OPEX: allowable in full for current tax year– Depreciation

• 5-yr straight line for tangible assets• 10-yr straight line for intangible pre-production assets

– Loss carry forward 10 yr maximum

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Fiscal RegimeThailand I vs. Thailand IIIThailand I vs. Thailand III

• 12.5% Petroleum Royalty

• 50% Petroleum Income Tax

• Sliding Scale Rate Petroleum Royalty (5 – 15%)

• 50% Petroleum Income Tax

• Special Remuneratory Benefit (SRB)

Thailand I (1971Thailand I (1971--1981)1981)

Thailand III (Post 1989)Thailand III (Post 1989)

Effective Royalty RateP ro d u c tio n (B /D ) T h a ila n d I

R a te (% ) T h a ila n d III

R a te (% ) 1 ,0 0 0 1 2 .5 5 .0 0 2 ,5 0 0 1 2 .5 5 .2 5 5 ,0 0 0 1 2 .5 5 .7 5 7 5 0 0 1 2 .5 7 .1 7

1 0 ,0 0 0 1 2 .5 7 .8 8 1 5 ,0 0 0 1 2 .5 9 .4 2 2 0 ,0 0 0 1 2 .5 1 0 .1 9 2 5 ,0 0 0 1 2 .5 1 1 .1 5 3 0 ,0 0 0 1 2 .5 1 1 .7 9 3 5 ,0 0 0 1 2 .5 1 2 .2 5 3 8 ,0 0 0 1 2 .5 1 2 .5 0 4 0 ,0 0 0 1 2 .5 1 2 .5 9 5 0 ,0 0 0 1 2 .5 1 3 .0 8

1 0 0 ,0 0 0 1 2 .5 1 4 .0 4 1 5 0 ,0 0 0 1 2 .5 1 4 .3 6 2 0 0 ,0 0 0 1 2 .5 1 4 .5 2

1 0 0 ,0 0 0

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Benefits

• Importation of foreign skilled workers and specialists

• Import free of duty and taxes

• Exemption of Administration Taxes

• Right to retain, take and remit abroad of Foreign Currencies

Obligations

• Total Completion/Commitment of work and expenditure obligations

• Reports & Data from Petroleum Operations

• Utmost effort to:

– Employing National Contents

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Petroleum SituationPetroleum Situation

-- Petroleum Field & ProductionPetroleum Field & Production

-- Pipeline Systems & GSPPipeline Systems & GSP

-- Gas Business in ThailandGas Business in Thailand

-- Thailand Petroleum BalanceThailand Petroleum Balance

Petroleum Fields

TotalTotal 7979 4141

• Gas 51 19onshore 2 1offshore 49 18

• Oil 28 22onshore 19 19offshore 9 3

Discovered Production

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SirikitSirikit

Bung Bung YaYa

WichienWichien BuriBuri

UU--ThongThong

KamphaengKamphaeng SaenSaen

Nam Nam PhongPhong

LAOS

T H A I L A N D

CHAI PRAKARN

KAMPHAENG SAEN (P)

U-THONG (P)

WICHIAN BURISRI THEP

PHU HORM

DONG MUN

NAM PHONG (P)

BUNG MUANG (P)

PRATU TAO (P)WAT TAENPRU KRATHIAM (P)SIRIKIT (P)

MAE SOON (P)SAN SAI (P)

CHIANG MAI

NAKHON RATCHASIMA

PONG NOK (P)

NONG TUM

SIRIKIT WEST (P)BUNG YA (P)

THAP RAT (P)

April 2005

PTTEP-SiamOil 16,817 BPDGas 54 MMscfdSino-U.S.Oil 1,101 BPD

Pacific TigerOil 169 BPD

PTTEP InterOil 483 BPD

EXXON MobilGas 33 MMscfd

DEFENCE ENERGY DEPARTMENT(DED)Oil 754 BPD

Onshore ProductionOil 19,324 BPD Gas 87 MMscfd

SONGKHLASONGKHLA

SONGKHLA

BUA BAN

JDA

PAILIN

L-STRUCTURE

NANG NUAN (P)KAPHONG (P)PLATONG (P)

TRATSATUN (P)JAKRAWAN (P)FUNAN (P)

BAANPOT (P)ERAWAN (P)

DARAPAKARANG

SURAT (P)PLADANG

GOMINMORAKOT

TANTAWAN

BONGKOT (P)UBON

BenchamasBenchamasNangNang NuanNuan

BongkotBongkot

ErawanErawanGroupGroup

Gas 1,982 MMscfdCondensate 64,768 BPDOil 74, 298 BPD

Chevron OffshoreGas 228 MMscfdOil 50,847 BPD

PTTEP Inter (Bong kot)Gas 342 MMscfdCondensate 10,108 BPD

Unocal (Pilin)Gas 437 MMscfdCondensate 21,090 BPD

Unocal (Erawan)Gas 976 MMscfdCondensate 33,570 BPDOil 23,451 BPD

April 2005

OFFSHORE PRODUCTION

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JDA PRODUCTION

c

Muda

Amarit

Tapi

Mali

BumiEast

BumiCakerawala

Bulan

Suriya

JengkaWest

Jengka

Jengka South

MudaSouth

Samudra

Wira

Senja

SamudraNorth

JengkaEast

THAILAND

MALAYSIA

JDA

JOINT DEVELOPMENT AREAN

S

EWB-17-01

A-18

B-17

0 20 km.

Cakerawala Field

• JDA Area : 7,250 Km2• PSC 50:50• Plan 390 MMscfd 20 yrs.

Cakerawala Field- CTOC - Started Prod.: 2 Jan.05- Gas 114 MMscfd

Condy 2,000 BBLD-- Songkhla Separated gas Plant: end 2005

เขตพื้นท่ีทบัซอนไทย-เวียดนาม-มาเลเซีย

MTJA PSCGross Revenue

Research Cess0.5%

Royalty10%

Cost Recovery50%

Profit Share

Government50%

Contractor50%

Income Tax0-20%

Less MTJAExpense

MalaysiaThailand

Split50:50

Tax holiday on the first 8 years

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Pipeline Systems & GSP• Existing System

• Offshore P/L

– Erawan to Rayong 2,000 mmscfd

– Erawan to Kanom 350 mmscfd

• Onshore P/L

– Rayong to BPK 1,270 mmscfd

– BPK to WN 860 mmscfd

– BPK to S.BKK 306 mmscfd

– Myanmar 1,100 mmscfd

– Rat-WN 400 mmscfd

• Gas Separation Plant

– No. 1-3 @ Rayong 950 mmscfd

– No. 4 @ Kanom 230 mmscfd

YADANA

BONGKOT

PLATONG

YETAGUN

BENCHAMASTANTAWAN

PAILIN

JDA

ERAWAN

RAYONG

Existing Network

Future Extensions

BPK

WNS.BKK

KANOM

RATBURI

NAMPONG

Gas Business in ThailandGas Business in Thailand

Gas Sale Agreements PTT & PRODUCER

Gas Supply Agreements

Unocal + Moeco

PTTEP + Total

Chevron

EGAT

SPP

Industrial

Oversea : Mynmar

PTT

PIPELINE & GSP

PRODUCER CUSTOMER

IPP

EGCO

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GSA = Take-or-Pay Basis ( 25-30 Years)- Time of GSA

CDD RIP Contract Year

- Gas Quantity Reserves DCQ ACQ CDC Take-or-Pay

- Price & Price adjustment formula IBP AY, BY, CY, DY Index -Iy, Fy, Ey, Wy, OMy,

I, F, E, W, OM

- Gas QualityContract Delivery Pressure Gas Specfication

- - Another factor

Sale Gas AgreementSale Gas Agreement

Present GSAPresent GSA

Unocal Unocal PTTEP Unocal Chevron PTTEP-Siam Exxon-Mobil

Case Thailand I Thailand I Thailand I Thailand I

GOT

1999

Thailand III Thailand I Thailand I

Location GOT GOT GOT GOT NC NE

Started Prod. 1981 1984 1993 1997 1983 1990

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Base price & Price adjustment formula

Cost plusEnergy Parity

Comparable FuelInflation IndicesExchange Rate

• Unocal I (Every year of July)• Unocal II & III (Every year of October)

• Bong Kot (April & October)• Chevron (April & October)

• Unocal IV (Every year of October)

• PTTEP-Siam (January & July)• Exxon-Mobil (Every month)

Sale Gas AgreementSale Gas Agreement

Basic Price adjustment formula (Offshore)Formula (1) -InflationFormula (2) -Ratio in Price formulaFormula (3) -Time Lag

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Onshore Gas Price Formula Onshore Gas Price Formula

- Normal Price - Decrease due to Disel price & Reserve

- Floor Price- Special Floor Price

• Permanent Pipeline Sale - Proved > 0.8 TCF, FR > 1 TCF)

• Associated Gas - PTTEP-Siam sale Directly to EGAT

Thailand Petroleum BalanceJan.-Mar. 2005

Crude Oil 835.6

Oil Product 35

Gas 148

1,018.611,018.61ImportImport

TotalTotal 1,551.311,551.31

1,188.81,188.8

Gas 440.5

Oil Product 748.3

DomesticDomestic

151.50151.50

ExportExportOil Product 97.9Crude Oilบ 53.6

Unit MBOED

DomesticDomesticCondy58.5

Oil 91.2

Gas383

532.7532.7

35% of Procurement

48% of Domestic Consumption

35%

65%

5 Gas Separate Plants

1,225 MMSCFD

8 RefineriesTotal Capacity

1,025,000 BBLD

ProcurementProcurement

ConsumptionConsumption

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25-years Gas Demand and Supply Plan

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

MTJDA B-17

MTJDA A-18

Arthit

Chevron

Bongkot

Pailin

Unocal 123

Yetagun

Yadana

NP/PH

Demand

Demand Growth 3.0% pa.

NP/PHYadana

Yetagun

Unocal 123

Pailin

BongkotChevronArthit

JDA A-18

JDA B-17

Growth

Maintain

Based on DMF Reserves (3P), as of Dec 31, 2003.Excluded S1 gas.

ENER

GY,

Bbt

u/d.

Demand Growth 5.0% pa.

Natural Gas DemandNatural Gas Demand--Supply OutlookSupply Outlook

Unit : MMSCFD@1,000 BTU/SCF

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

1999 2001 2003 2005 2007 2009 2011 2013 2015

POWERPOWER

INDUSTRYINDUSTRYGSPGSP

2%8%0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

1999 2001 2003 2005 2007 2009 2011 2013 2015

DOMESTIC COMMITTMENTDOMESTIC COMMITTMENT

IMPORT COMMITTMENTIMPORT COMMITTMENT

NEW FIELDSNEW FIELDSSWINGSWING

15%

Unit : MMSCFD@1,000 BTU/SCF

2%8%15%

CAGR = 5%CAGR = 5%

Natural Gas Demand OutlookNatural Gas Demand Outlook Natural Gas Supply OutlookNatural Gas Supply Outlook

Source : PTT

Replace CoalReplace Coal

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The 19The 19thth--RoundRound

Concessions BiddingConcessions Bidding

(2005)(2005)

Upstream Promotion

The 19th bidding roundThe 19th bidding round

(2005)(2005)82 blocks covering 440,704 km2

Area(Km2) # Blocks Total

(Km2)

Onshore 4,000 64 234,297

GoT 20,000 12 85,847

Offshore 20,000 6 120,560

ANDAMAN AREAANDAMAN AREA

GULF AREAGULF AREA

NN--CENTRAL AREACENTRAL AREA

NE AREANE AREA

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Summary & Conclusion- Thailand : Concession /PSC (JDA) system

- Petroleum fields :Tertiary Basin (main)(others in Permian carbonate)

Onshore : 6 Oil Fields 23,000-24,000 bpd2 Gas Fields 97-100 mmscfd

Offshore : Oil 81,244bpdGas 2,070 mmscfdCondy 65,000 bpd

- Thailand Petroleum Balance : Domestic 35 %Import 65 %

- Thailand : 19 th Bidding round (2005)

L4

Thank You Very MuchMore About DMF?More About DMF?

Visit: www.dmf.go.th

Department of Mineral FuelsDepartment of Mineral FuelsShinawatraShinawatra Tower 3,24Tower 3,24--26 Floor, 26 Floor, ViphavadirangsitViphavadirangsit Rd, Rd, ChatuchakChatuchakBangkok 10400, THAILANDBangkok 10400, THAILANDTel. 66Tel. 66-- 22--791791--83008300Fax. 66Fax. 66--22--791791--83578357