Thailand’s cabinet approved a draft oil law on Tuesday with changes to the deals on offer, after the government delayed a bidding round for concessions earlier this year due to criticism of contract terms from politicians and activists. Yet the new law continued to draw fire from those who opposed the bidding round and Energy Minister Anantaporn Kanjanarat told reporters it would be extensively reviewed before being sent to parliament.
Opening a round of bidding for petroleum exploration concessions is the next step in the military government’s plan for energy reform after it restructured domestic gas prices late last year. There was no timeframe yet for the new bidding round, Anantaporn said, and no rush given low international oil prices mean revenue from energy production would be relatively low.
Last month, Anantaporn said he expected the bidding to begin in the middle of 2016. The new law adds a production sharing contract (PSC) in addition to existing concession contracts under which companies pay taxes and royalties, Anantaporn said. Under existing deals, the government receives taxes and royalties equivalent to around 67 percent of pretax profit.
Critics would like to see Thailand get a bigger cut. Thailand relies on energy imports and uses natural gas to generate nearly 70 percent of its power. It has struggled to secure long-term supplies amid declining output and rising demand. The bidding round delayed in February would have been the first since 2007, and was for six offshore blocks in the Gulf of Thailand and 23 onshore blocks.
The round had already been delayed by four years, due to floods in 2011 and then by a political crisis that began in late 2013 and ended with a coup in May 2014. Thailand is also considering the terms to be offered when existing concessions expire, which include deals held by Chevron Corp and PTT Exploration and Production, which together account for about 65 percent of Thailand’s total petroleum production and are due to end in 2022-2023.