Panel puts Egat's LNG import plan on hold

  • May 21, 2019
  • Bangkok Post

The Energy Policy Administration Committee (Epac) has sent back a plan from the state-run Electricity Generating Authority of Thailand (Egat) to import 1.5 million tonnes of liquefied natural gas (LNG) for the country's power generation.

On May 10, Egat announced that it had selected a winning bidder to be the LNG importer and supplier for Egat's power plants and aimed to propose its conclusions to Epac.

Malaysia's Petronas LNG Ltd was selected as the winning bidder, competing against 11 other companies.

Last Thursday, Epac suspended Egat's plan because the Energy Policy and Planning Office (Eppo) has doubts about the volume of LNG -- 800,000-1.5 million tonnes a year -- matching utilisation rates.

"The office is concerned that once Egat makes the massive LNG purchases, they cannot be fed to generate the power, resulting in a 'take or pay' situation," said Energy Minister Siri Jirapongphan. "Otherwise, the LNG stock is an operating cost to be passed on to power bills. But the ministry did not doubt at all the selection process of Egat, and the office found that the imported price was in line with the bidding criteria that the bidder has to offer the lowest price compared with other LNG importing contracts."

PTT Plc and Egat are the only two agencies that are eligible to import LNG. They were granted licences from the Energy Regulatory Commission (ERC).

Egat's 1.5-million-tonne LNG contract is the first tranche, while PTT has signed purchase contracts totalling 5.2 million tonnes a year.

Mr Siri said Epac has ordered PTT and Egat to revise forecasts and plan for new imported LNG for 2020 to be in line with the imported volume of PTT.

"The ministry wants to make sure that the shipment volume will not be an obstacle to PTT's volume, compelling the 'take or pay' situation in the future," he said.

Moreover, Epac has ordered the ERC as the LNG regulator to open up third-party access to utilise PTT's gas terminal and pipeline in order to build confidence that Egat's imported LNG process will improve overall national energy security and PTT's gas procurement.

"PTT, Egat and ERC have to report these assignments within two weeks to Epac," Mr Siri said.

Once Epac approves Egat's LNG plan, it will propose the agenda to the National Energy Policy Council chaired by the prime minister.

"The government is committed to maintaining power generation costs under the national power development plan (PDP) for 2018-37 and avoid any impact on consumers' power bills," Mr Siri said. "The new operator of Erawan and Bongkot, PTT Exploration and Production Plc, will use its capability to feed the natural gas to power generation with the cheaper cost, expected to lower power bills by 15 satang per kilowatt-hour from 2022 onward."

Under the PDP, the government is opening up household solar power with plans to buy the electricity at 1.68 baht per kilowatt-hour.

Epac also authorised Eppo to conduct public hearings nationwide in order to draft a gas plan for 2018-37 because natural gas in the Gulf of Thailand accounts for 60-62% of the country's power generation in 2019 but is expected to decline.

Meanwhile, gas demand for power generation stands at 5,000 million standard cubic feet per day, but it's seen rising to 5,500 MMSCFD in 2037.

"The country needs to import LNG at 23 million tonnes a year by 2037," Mr Siri said.