THE Energy Ministry will in the next few days come up with a plan to mitigate the impacts of the suspension of petroleum production by holders of concessions on agricultural land, following an order issued by the Supreme Administrative Court order on June 1, Energy Minister Anantaporn Kanjanarat said yesterday.
In that ruling, the court revoked an order by the Agricultural Land Reform Committee allowing the exploitation of natural resources for purposes other than agriculture in areas earmarked for land reform.
As a result, the Energy Ministry’s Department of Mineral Fuels (DMF) has instructed all onshore concessionaires temporarily to cease petroleum operations in areas under the Agricultural Land Reform policy.
Anantaporn said the suspensions would affect state revenue, especially the production halts in the S1 project, which will cause the loss of 16,000 barrels per day of crude-oil production.
The ministry has convened with relevant private companies and consulted its legal team to seek solutions, he added.
He said that at this stage the ministry preferred to seek normal legal avenues to solve the problem rather than proposing that the junta to invoke its special powers under the interim charter to solve the issue.
The DMF has instructed all seven concession holders in the affected zones to cease operations until they are allowed to utilise those areas again.
One of them is the S1 operator, PTTEP Siam (PTTEPS), a subsidiary directly or indirectly held 100 per cent by PTT Exploration and Production (PTTEP).
PTTEP recently informed the Stock Exchange of Thailand that PTTEPS had temporarily ceased all operations in the land-reform areas under the S1 Project since June 3.
The other six concessionaires are CNPC HK (Thailand), Eco Orient Resources (Thailand), PTTEP SP, Apico (Korat), Twinza Oil and Yanchang Petroleum (Thailand).
It is preliminarily estimated that the suspensions will causes a decline in crude-oil production by 16,000 barrels per day and in natural gas by 110 million cubic feet per day, valued at a total of Bt47 million per day. This will cost the state Bt26 million per day in royalties and petroleum taxes.
According to a recent PTTEP filing to the SET, the S1 Project covers areas of Sukhothai, Phitsanulok and Kamphaeng Phet provinces in which PTTEP and PTTEPS hold a 100-per-cent participating interest. Last year the project provided average daily sales of about 27,351 barrels of crude oil, 264 tonnes of liquefied petroleum gas (LPG) and 21 million standard cubic feet of natural gas.
The temporary suspension of S1 operations in areas under the Agricultural Land Reform will lead to a decrease in daily sales of about 15,000 barrels of crude oil, 130 tonnes of LPG, and 10 million standard cubic feet of natural gas.
These reductions translate to around 4-5 per cent of PTTEP’s 2017 sales-volume guidance of 300,000-310,000 barrels of oil equivalent per day.