At the centre of Thailand’s economic growth, the energy sector is using progressively diverse means to meet the continually increasing demand for energy sources. The country’s growing industrial capacity, ongoing urbanisation and organic population growth are all contributing to rising domestic energy intensity – a trend that policymakers have addressed in the recently unveiled power development plan, which utilises a more varied primary energy mix and greater efficiency to bolster flagging self-sufficiency levels.

Diversifying Sources

In the power sector this strategy calls for a gradual reduction in the use of domestic natural gas and dirtier coal-fired power plants in favour of renewable and imported gas, along with a reduction in per capita consumption. Diversifying energy sources is important as domestic gas output continues its decline, with larger existing fields maturing and new exploration stalling. In the meantime, the sector is working to expand its import and distribution infrastructure to meet growing domestic consumption. Thailand also remains heavily reliant on crude oil imports to meet domestic needs, although increased investments in new and existing fields have brought about limited production gains, which have resulted in cumulative growth in output.

Economic Engine

The oil and gas sector’s primary value to the country over the years has been to supply the fuel that keeps the economic engine running, rather than providing any significant standalone contribution to the economy. In 2016 the mining and quarrying sector, which includes hydrocarbons extraction, contributed BT397.61bn ($11.2bn) to Thailand’s GDP, or just 2.8% of the total. This value declined 0.6% from the previous year and remains well below the peak of BT496.62bn ($13.99bn) posted in 2013, as both commodity prices and production rates have declined in recent years. By contrast, the electricity sector continues to increase its economic value. It achieved an all-time high of BT323.75bn ($9.1bn) in 2016, having expanded by 4.3% that year and in the previous year, after growing by 2.7% in 2014.

Stepping On The Gas

Following the trend of the global hydrocarbons industry, natural gas production and development in Thailand has grown from being a by-product of crude oil extraction into a key driver of the energy sector. The sector is currently focused almost exclusively on the Gulf of Thailand, where the vast majority of natural gas development takes place. Domestic natural gas production increased almost every year – 1989 and 2001 excepted – for nearly three decades from a rate of just 350m standard cu feet per day (scfd) in 1986 to a sector best of 4.07bn scfd in 2014, according to figures from the Energy Policy and Planning Office (EPPO). This strong bull run of growth, which averaged 6.14% from 2002 to 2014, came to an end in 2015, when output dipped 5.5%. This was followed up by another 1.9% decline in 2016, when production totalled 3.77bn scfd. The Gulf of Thailand is by far the most productive region in the country for gas production, with the Erawan and Bongkot fields accounting for the heavy majority of output. Although now in decline, the two fields combined to produce 2.12bn scfd of natural gas in 2016, accounting for more than half of total domestic output for the year.

Operated by Chevron Thailand Exploration and Production, the Erawan field has been the most successful natural gas play in the Thailand to date, producing a record 1.4bn scfd at its height in 2014. Production from the field’s 32 wells has tailed off since this peak, however, as output has dwindled to 1.33bn scfd in 2015 and 1.34bn scfd in 2016. While a portion of this decline is a result of natural life cycle of the reserve, the soon-to-expire concession agreement has given the operator little incentive to invest heavily in boosting output from the field (see analysis).

Located near the Erawan field, Bongkot is operated by state-owned energy operator PTT Exploration and Production (PTTEP) and lifts gas from a total of 54 wells. The site has been producing since 1993 and has only recently reached peak output levels with production averaging 946m scfd in the period between 2013 and 2016 with a high of 1.02bn scfd in 2015.

Smaller Fields

Secondary fields continue to contribute, but are also in decline. These include the Pailin field, which has been operating since 1999, and which yielded 339m scfd in 2016. The Sirikit field, meanwhile, produced 46m scfd, and the Tantawan field yielded 140m scfd. A handful of smaller fields are maintaining output at a relatively stable level, and some are actually increasing output, generally helping to offset losses elsewhere. Production at the Arthit field, which is 80% owned by PTTEP, has stabilised over the past three years with annual output of approximately 246m scfd in 2014, 240m scfd in 2015 and 244m scfd in 2016, after registering a high of 501m scfd in 2010. The Sinphuhorm field has boosted production from 88m scfd in 2013 to 120m scfd in 2015 and 2016.

This recent decline of production after decades of consistent growth is a serious cause for concern for Thailand, although not entirely unforeseen. Domestic gas consumption has risen in parallel with production over the past three decades, driven largely by a shift away from coal-fired power plants to cleaner-burning natural gas, along with a rise of the industrial sector, which also consumes significant quantities of the fuel. Overall consumption has increased from a paltry 326m scfd in 1986 to 4.71bn scfd in 2016. The bulk is consumed by electricity producers, which accounted for 59.3% of gas usage in 2016 followed by use as a feedstock in gas separation units (20.1%), industrial applications (14.7%) and transportation (5.9%).

Black Gold

Thailand has never been a prolific crude oil producer and remains heavily reliant on imports to supply both its internal demand as well as for feedstock in its extensive refining and petrochemicals industries. That being the case, local production is experiencing a modest revival with the recent activation of three new fields in the country, which have helped to reverse the overall decline of the sector since its previous high-water mark in 2009, when the country produced 154,041 barrels of oil per day (bpd). Overall output edged up 10% in 2015 and 7.3% in 2016, to reach 163,080 bpd.


Junior upstream oil and gas company Kris Energy has been active in the Pattani Basin, holding stakes in the G10/48 and G11/48 concessions in the Gulf of Thailand, where the Wassana and Nong Yao oil fields commenced production in 2015. In addition to Wassana and Nong Yao, the G10/48 licence area contains two additional oil discoveries – Niramai and Rayrai – which are also being developed.

The Wassana oil field commenced production in August 2015, with 14 development wells producing 1624 bpd during that year, followed by 7606 bpd in its first full year of operation in 2016. The Nong Yao field followed the same schedule, yielding 3236 bpd for the year after starting up in June 2015 and then 9381 bpd the following year in a full production run. Located nearby, the Manora field, operated in partnership by Mubadala Petroleum (60%), Tap Energy (30%) and Northern Gulf Petroleum (10%), ramped up operations at its site starting in late 2014. Estimated to contain approximately 20m barrels of oil, Manora produced 12,900 bpd in its first full year of production in 2015, followed by 11,029 bpd in 2016.

In addition to these newcomers, improved operations have also boosted production at older fields in the country. The Tantawan field, which has been operating since 1997, increased its output to 29,830 bpd in 2016 – its highest mark since 2012. Meanwhile, oil production at Erawan has risen steadily over the past three years to hit 31,217 bpd in 2016, while PTTEP invested in the long-running Sirikit field to reinvigorate production which was boosted 4.1% to 29,095 bpd in 2015 before dropping off to 26,944 bpd in 2016.

Working Partnership

The limited domestic hydrocarbons opportunities in Thailand have by necessity forced exploration activity literally to the edge of the country’s borders, and sometimes even beyond. Such is the case with the development of the offshore areas, which sit in a geographic limbo of territorial claims – namely the resource-rich areas of overlapping claims with Malaysia and Cambodia. Putting their differences aside, Malaysia and Thailand have forged a mutually beneficial agreement in order to exploit offshore resources through the creation of the 7250-sq-km Malaysia Thailand Joint Development Area (MTJDA). Producing gas since 2005, fields within the MTJDA are now among the most fruitful, providing Thailand with 531m scfd of natural gas in 2016.

The primary benefits from this agreement, which grew out of a 1979 resolution of a border dispute, is the development of gas fields within the wedge-shaped area of overlapping claims located in the Gulf of Thailand. According to the agreements laid out by the MTJDA, both governments share equally in the expenditures and benefits derived from hydrocarbons extraction and production within the disputed zone. The area currently hosts three development blocks, A-18, B-17 and B-17-01, all of which are active. Hess Oil Company of Thailand, formerly known as Triton Oil, and PC of Malaysia own equal shares in each of the three blocks operating under a production-sharing contract (PSC), with Carigali Hess Operating Company (Carigali-Hess) as the operator.

Shared Profits

The PSCs governing these operations split revenues equally between the two countries, including 10% royalties on gross production, a petroleum tax of 10% for years 9-16 of production, and 20% thereafter, as well as equal shares in remaining profits. The remitted royalty, profit petroleum, and other associated revenue from the operations in Blocks A-18 and B-17 for the 2015 calendar year totalled BT18.34bn ($516.7m) for Thailand. While the Malaysia-Thailand joint venture is a good example of international cooperation resulting in a mutually beneficial arrangement for both parties, the situation is decidedly less friendly with Thailand’s eastern neighbour, Cambodia. Although exploration concessions were awarded for much of the area more than 40 years ago, talks of dispute resolution or joint development zones have sputtered and stalled for years without any tangible progress. As a result, potentially substantial offshore oil and gas deposits continue to remain unexploited. The 27,000-sq-km offshore Overlapping Claims Area (OCA) is estimated to contain between 1.4bn and 3.6bn barrels of oil equivalent – enough to potentially rival Thailand’s current remaining oil and gas reserves.

Shopping Spree

As domestic natural gas supply begins to wane, power producers and industrial consumers are increasingly turning to foreign suppliers to meet their fuel needs. Fortunately for these consumers, the international price of gas remains soft due to a glut of supply and slack global demand. Natural gas imports have surged to the forefront of Thailand’s primary energy mix, as imports increased from virtually non-existent in 1999 to 1.25bn scfd in 2016. The majority of this gas is sourced from neighbouring Myanmar, where major gas fields are being jointly developed with significant portions of output transported to Thailand via pipeline. The three major gas fields currently exporting to Thailand supply nearly one-quarter of the country’s gas needs. Those fields are Yadana, which piped 424m scfd to Thailand in 2016; Yeta gun, which supplied 218m scfd; and Zawtika, a newer field that added 217m scfd in 2016.

Strategies For Expansion

However, with Myanmar now experiencing considerable growth in energy demand at home as the country accelerates its own economic and industrial development, securing overland supplies in the future could prove to be a questionable situation. The alternative to this is an expansion of the country’s intake of seaborne liquefied natural gas (LNG) shipments, which have increased from zero in 2010 to 390m scfd in 2016. Shipments are fed into the national gas transmission system at the country’s sole regasification plant, located at the Map Ta Phut industrial estate in the south of the country along the Gulf of Thailand. The facility has an annual LNG capacity of 5m tonnes per annum (tpa), but is in the midst of upgrade works that will double its size in 2017. Plans are also being discussed for a further expansion of the terminal to 11.5m tpa by 2019. In June 2016 the National Energy Policy Committee (NEPC) also gave PTT the green light to construct a second LNG receiving terminal in Rayong, with an investment of BT38.5bn ($1.1bn).

The ongoing and proposed expansions are being made in tandem with efforts by the country to secure large long-term LNG supply contracts. Taking advantage of this period of soft commodity prices, state-owned PTT Procurement and Distribution has embarked on a natural gas spending spree of unprecedented proportions. “We’re taking the opportunity of the buyer’s market situation of the LNG at this stage to secure a few more long-term contracts,” Tevin Vongvanich, president and CEO of PTT, told local press in August 2016. “It’s the sale time now for LNG, so we’re doing our shopping.”

LNG Deals

Serving as the primary gateway for natural gas supplies into the country, the PTT subsidiary is tasked with obtaining sufficient gas supplies from abroad and distributing them through the company’s transportation pipeline to state-owned and independent power producers, as well as to industrial consumers. The company began exploring long-term LNG deals in earnest in January 2015, when it received its first delivery of a 20-year supply agreement with Qatargas encompassing 2m tonnes per year, approximately 289m scfd. Not content to stop there, PTT inked a major deal in 2016, when the NEPC approved a 15-year contract with Malaysian energy giant Petronas for 1m tpa in 2017 and 2018, followed by 1.2m tpa per year thereafter. The company secured another 20-year, 1m-tpa deal with BP in December 2016, set to kick off in 2017, and another 1m-tpa contract with Royal Dutch Shell.


Market liberalisation in the 1990s has created a landscape in which state-owned Electricity Generating Authority of Thailand (EGAT) retains control of transmission and distribution, as well as a good portion of generation capacity, while a growing number of independent power producers (IPP) are taking up an increasing share of national electricity production capacity. To minimise conflicts of interest within EGAT’s various functions, oversight has been tasked to the EPPO, which evaluates each project and awards production contracts in the form of power purchase agreements (PPA).

Negative public perception of coal, nuclear and large hydropower generation facilities has fuelled the rise of natural-gas-fired power plants in Thailand over the past two decades, to the point that the fuel accounted for 63.2% of all electricity generated (126,150 GWh) in 2016. Coal-fired thermal plants ranked a distant second, at 31,107 GWh, with much smaller contributions made by hydro (3543 GWh) and petroleum (491 GWh). Imported electricity also accounted for a significant portion of domestic consumption to the tune of 32,276 GWh, primarily from Laos and Myanmar (see analysis). The small but growing renewable energy (RE) sector contributed 5.01 GWh from sources other than hydro. When hydropower is added to the RE total, it amounts to just over 3548 GWh. “Renewable energy has become a very attractive sector across Thailand’s economic spheres, due to the fact that it is an industry without price wars and with three triple-A customers in the form of EGAT, Metropolitan Electricity Authority and Provincial Electricity Authority,” Jormsup Lochaya, the chairman and acting managing director of renewable energy company Superblock, told OBG.

New Sources

Although RE currently represents just a small fraction of total output, the sector presents substantial opportunity for growth going forward – particularly as the government has emphasised RE technologies in its long-term plans to solidify a sustainable national energy mix. The government’s Renewable Energy Development Plan 2008-22 calls for RE sources to contribute a minimum of 20.3% of final energy consumption by the year 2022.

Achieving this objective entails boosting RE capacity up to target levels of 800 MW in wind power, 500 MW in solar power, 324 MW in hydropower, 3700 MW from biomass, 160 MW from waste-to-energy (landfill) sources and 120 MW from biogas. Other non-electricity contributions would be derived from fossil fuel replacement products such as biofuels. “In terms of renewable sources, Thailand has developed solar power very quickly since the government’s promotion of renewables began due to its geographic positioning and opportunities for technology transfer. Biomass is coming up as well, taking advantage of Thailand’s abundance of agricultural commodities used as inputs,” Sopacha Dhumrongpiyawut, CEO of renewable energy firm Gunkul Engineering Public Company Limited, told OBG. To encourage the substantial investments necessary to meet these targets, the government has put in place a series of financial incentives for RE power producers. Foremost among these is an additional payment allocated to RE producers, which comes in the form of a supplemental payment to the standard tariff rates. Operating similarly to feed-in tariffs, these rates are issued as a predetermined price per KWh of electricity produced, and differ based on the size and technology used in production. “Given the attractiveness of the renewable energy sector, Thailand has seen some companies shift their business models to increasingly rely on renewable power generation for a larger share of their overall revenue,” Sopacha told OBG. “Companies are looking for sustainable businesses and renewable energy has many positive aspects in that regard, including a lack of dependence on raw materials.”

Planning For The Future

Spiking consumption levels and limited domestic resources have led to a dramatic shift in Thailand’s energy situation over the past decade. This has brought about major restructuring of long-term strategic planning for the power sector, culminating in the Power Development Plan 2015-36 (PDP 2015). In its most distilled form, the plan attempts to address the key issues currently facing the domestic electricity industry: a growing reliance on imported hydrocarbons fuel, increased carbon emissions and overall inefficiency, and the combined effects of these factors on domestic energy prices.

Thailand has invested heavily in natural gas power generation over the past decade. As a result, electricity production fuelled by natural gas accounted for approximately two-thirds of electricity consumed in 2016. The PDP 2015 seeks to reverse this trend by diversifying the country’s electricity portfolio. “Solar power has been the fastest to develop in Thailand due to relatively high government tariff incentives when compared to those for wind, waste and biomass,” Cherdsak Wattanavijitkul, the president of TPC Power Holding, told OBG. “However, revisions made to feed-in tariff rates point to biomass as the upcoming energy source being targeted for development.”

Change Of Plans

By the end of the PDP 2015 period, set for 2036, the government is expecting to cut natural gas as a share of domestic power production, to 30-40% from 2014 levels of 64%. To compensate for these cuts, the proportion of RE will rise to 15-20% of total electricity production, up from just an 8% share in 2014. The plan also calls for a slight uptick in the share of coal-fired power production, up from 2014 levels of 20% to 20-25% by 2036. An unspecified amount of this capacity is projected to be delivered as “clean coal” by carbon capture and storage or other technology, although none was operating in the country as of early 2017. Hydropower is expected to deliver 15-20% of total power production by 2036, with up to 5% to be delivered from nuclear power.

“To meet the fuel diversification target in the PDP 2015 we must reduce natural gas, while increasing coal-fired power plants will ensure supply meets future demand. Investment in renewables is necessary hand in hand with upgrading existing plants to ensure Thailand meets emissions reductions pledged in the Paris Agreement,” Saharath Boonpotipukdee, deputy governor of EGAT, told OBG. According to Prasertsuk Chamornmarn, executive director of the Thailand Greenhouse Gas Management Organisation, initiatives from both the state and the private sector will play a key role in meeting emissions targets. “Both market mechanisms and non-market mechanisms will play significant roles in reducing greenhouse gas emissions,” she told OBG. “To that end, several mitigation schemes, including the Thailand Voluntary Emission Reduction scheme and the Low Emission Support Scheme have been introduced in order to incentivise sustainable environmental practices.”

Mixing It Up

In completely overhauling the generation mix, the private sector will be presented with significant investment opportunities in the form of IPP contracts over the next 20 years. Some 57.5 GW of new generation capacity is expected to be built by 2036 in order to meet future power requirements and replace the 24.74 GW from ageing power stations.

Significant opportunities are to be found in the RE sector, which accounts for the largest chunk of new capacity, at 21.65 GW. This is split between 12.11 GW of domestic sources and 9.54 GW of RE imports from neighbouring countries, the latter of which will likely consist of large hydro projects. Pump-storage hydro-power plants, which use a series of reservoirs and pumps that act much as a rechargeable battery for plants by pumping water upstream into the reservoir during off-peak hours, account for another 2.1 GW.

The next-largest share of new generation will be allocated to combined-cycle power plants (17.48 GW), which utilise gas and steam turbines to produce more electricity than conventional power plants. Traditional thermal power plants will contribute 12.11 GW to the mix, split between coal (4.72 GW) and lignite (7.39 GW), while nuclear will represent 2 GW, power imports 1.47 GW and gas turbine another 1.25 GW. The remaining 4.12 GW will come from cogeneration power plants.


As well as the increases in power needed to keep pace with rising demand, investment is also under way in other utilities, such as the water network. “The Ninth Bangkok Water Supply Improvement Project (2015-22) allocated BT43bn ($1.2bn) to expanding coverage in response to growing demand and increasing productivity,” Thanasak Watanathana, governor of the state-run Metropolitan Waterworks Authority, told OBG. “At present, 99% of Bangkok, Samut Prakan and Nonthaburi are covered by the network, and the high level of investment necessary to cover the remaining 1% is worthwhile to ensure access for all.”


Thailand’s energy sector is expected to continue to evolve at a rapid pace over the next two decades as the country’s electricity network adapts to the new realities of domestic hydrocarbons scarcity. With no major new oil or gas discoveries to be developed and exploration coming to a crawl, further production declines will be inevitable over the next decade unless the government is able to hammer out a new regulatory regime and launch the much-delayed 21st concession bids. In response, domestic pipeline and LNG regasification infrastructure will be expanded in the short term to accommodate the growing domestic supply and demand gap. “The next crucial step for the sector will be changing the existing business model,” Bundit Sapianchai, the president and CEO of renewable energy company BCPG, told OBG. “I believe strongly in the concepts of distributed energy and peer-to-peer energy, whereby technologies can be mobilised to enhance the efficiency of the sector and help reduce the need for large-scale projects, while offering customers and end users more choice in purchasing.”

Investment opportunities will be available across the utilities sector as supply is built up to meet demand. IPPs will benefit for the foreseeable future. This will be particularly true in the development of renewables and more efficient thermal power plants as the country looks to refashion its power generation composition.