Energy Plans


Economic News

22 Jul 2010
Text size +-
Even as oil prices continue to fall, petroleum executives and government officials in Thailand are renewing their call for the development of biofuels, testifying to the country's far-sighted outlook on energy policy.

Thailand cannot afford to be lulled to complacency by cheap oil and gas prices, especially considering that it relies on gas for approximately 70% of electricity output and is facing the eventual prospect of dry natural gas reserves.

Narongrit Tavornvisitporn, assistant managing director of Corporate Affairs for Thai Oil Public Company, recently told OBG, "Energy diversification initiatives cannot be put on hold simply because of a reprieve in peaking hydrocarbon prices."

On November 14, Energy Minister Wannarat Channukul said that the country's reserves are expected to run out in 18 years, and that the country must intensify efforts to secure future energy supply.

Thailand's reserves may, in fact, dry up even faster than Channukul's prediction. The Ministry's estimate assumes that national gas consumption will average 2835m standard cubic feet per day (mmscfd). However, according to statistics from the Energy Policy & Planning Office, the rate of gas consumption in the first nine months of 2008 averaged 3521 mmscfd, showing a 7.5% increase from the same period in the previous year. If overall energy demand continues to increase at the current rate of 13%, as is expected, the country's reserves will have an even shorter lifespan.

Yet recent successes in gas exploration initiatives have revealed a promising amount of new feedstock that may serve to delay the inevitable. On the same day of Minister Channukul's statements, both Total, a French oil and gas group, and PTT Exploration and Production, Thailand's national energy exploration flagship, announced the discovery of reserves in Bongkot and in the M9 gas field in Burma, respectively.

Total - which has a 33% stake in Bongkot gas field, Thailand's largest - hopes to produce two wells by 2010 and plans to bring a third online in a later stage of development.

Meanwhile, PTT announced that all of its 13 wells drilled in the M9 block had proved successful, bringing total proven reserves of that area to 1.38 trn cubic feet a day. PTT hopes to use these reserves to supply Thailand by 2013. There is no indication yet of how these new supplies will figure into the Ministry of Energy's targeted goal to decrease the country's electricity dependence on gas from 70% to 50% over the next decade.

Currently, Thailand depends on imports for over 60% of its total energy needs, a proportion that major sector players agree must be reduced. In order to diversify away from both natural gas - the country's foremost hydrocarbon resource - and imported fossil fuels, industry leaders are pushing for biofuel and ethanol.

"Thailand will never survive if they have to rely on imported energy," said Narong Boonyasaquan, managing director of CUEL, a leading offshore facility engineering company, in a recent interview with OBG. "What you have to do is look at your strengths: turn agriculture into energy," he stated, referring to the country's nascent ethanol and palm oil-derived biodiesel industry, which has experienced a recent slump.

Thailand became a net exporter of crude palm oil in 2007, and 2008 production levels are estimated at 1.4m tonnes for the year, exceeding demand by around 300,000 tonnes. According to figures from the local press, 70% of total production is targeted for domestic consumption, with the rest going toward biodiesel production.

The country has been pursuing a biodiesel program for the past few years, and while record oil prices had built up momentum in the industry, it is now swimming against a tide of relatively cheap oil.

In November, prices for crude palm oil stood at 15.75 baht/kg, a 64% plunge from a record high price of 44 baht/kg in March of this year. As gas and oil prices have declined, so has consumer demand for alternative fuels.

In an effort to shore up the industry, the government announced on November 19 that it would spend 2bn baht to buy up the palm oil surplus that has accumulated as international importers and domestic consumers lose interest in biofuels. The move will guarantee the price of palm oil at 22 baht/kg, assisting planters in the short term, while in the long term prolonging the health of the industry.

The promotion of ethanol and biodiesel is one of five main tenets of the Ministry of Energy's most recent energy plan, released last month. It calls for the acceleration of the yet to be released 15-Year Renewable Energy Development Plan (REDP), as well as full backing for the sector in making ethanol and biodiesel "the energy for Thais."

While the specifics of this plan are still vague, the recent buy-up of palm oil surplus is an encouraging sign of the government's commitment to the industry and the future of biodiesel in Thailand.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart

Read Next:

In Thailand

How does Asia Pacific rank on net-zero emissions targets?

A recent report found that relatively few companies in the Asia-Pacific region have adopted net-zero carbon emission strategies to date. Nevertheless, there are grounds for cautious optimism as...


Which markets are pioneering lower-carbon desalination technologies?

Long seen as a high-cost, energy-intensive process, desalination mega-projects are seeking to tap renewable resources to limit the cost and environmental concerns of this crucial technology.