Interview: Piyasvasti Amranand

What impact have recently depressed oil prices had on Thailand as a net energy importer, and what is your outlook on price stabilisation?

PIYASVASTI AMRANAND: Thailand is indeed the largest net importer of energy in ASEAN, with 55% of our commercial energy consumption being imported. Oil price volatility has certainly had an impact. For example, in 2014 the value of net energy imports stood at around BT1trn ($28.2bn) and the value of gross energy imports stood at BT1.4trn ($39.4bn). However, in 2016 this figure declined quite substantially, with gross energy imports estimated to be around BT700bn ($19.7bn). This has benefitted the Thai economy as a whole, as we have witnessed a substantial decline in the domestic petroleum price and the price of electricity, which has served to boost the economy at a time when it had been relatively stagnant. An important factor to consider, however, is that low energy prices tend to impact commodity prices as well, so the net benefit has not, in effect, been that strong. As Thailand is a large exporter of several major commodities and prices have been impacted, it has been losing on that front, and this must be considered in conjunction with impacts on the energy sector itself.

While the global recovery in prices has already started, having risen substantially in 2016 and 2017, standing at above $50 per barrel, we are not counting on the fact that this trend will continue in a sustainable way. While many analysts have been forecasting recovery to a price range of $60-70, I consider this to be an optimistic estimate, especially as we see several alternatives coming up fairly quickly such as shale oil and gas, liquefied natural gas (LNG) projects and potential surges in renewables over the medium term.

How can Thailand work to maintain its energy security moving forward?

PIYASVASTI: So far, Thailand has been able to implement the measures and projects necessary in order to provide a sufficient supply of energy at a reasonable price, unlike some of its ASEAN neighbours, which have been facing shortages of certain types of energy. This has not been an issue domestically since the first and second global oil shocks in 1973 and 1979, respectively.

The key point is that while there are many types of energy that one can make use of, one must prepare well and plan ahead many years in advance. At present I believe that LNG is a good source of energy for providing security. Long-term LNG supply contracts can now provide fairly stable energy prices, and diversification can be achieved to many sources of LNG.

While coal is often thought to be a cheaper alternative to natural gas in terms of financial cost, and while many proponents of coal-fired power plants exist, substantial declines in LNG prices have closed this gap and LNG is now more feasible than coal, once the external cost of global warming is factored in.

How do you assess the attractiveness of investments in unconventional forms of energy resources and technology abroad?

PIYASVASTI: Among the problems facing Thailand is a decline in domestic oil and gas reserves, along with delays on new concessions and extensions of existing concessions, which account for a very substantial proportion of gas production in the country. Thus, looking further afield is key, and we have had success stories in terms of investments in ASEAN neighbours such as Myanmar, and continue to look for reserves in regions near and far including the Middle East, Africa and Latin America. When it comes to shale oil and shale gas in North America, while the price of gas appears to be very cheap, once the cost of liquefaction and transport to Asia is added, the cost is no longer as attractive as other attainable energy sources such as investments in natural gas. While we must remain open to any investment which is potentially interesting, investing in technologies and processes with which we are currently unfamiliar must be taken with due care.