National Oil Company proposal scrapped

politics March 31, 2017 01:00


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NLA succumbs to pressure, withdraws controversial article.

A NATIONAL Legislative Assembly (NLA) subcommittee yesterday gave in to opposition and withdrew the controversial Article 10/1 amendment to the Petroleum Act, effectively sinking the proposal to set up a new national oil company.

Before the dramatic withdrawal, more than 10 NLA members had argued in favour of Article 10/1 and only one NLA member, who called for a separate legislation to set up the national company, had spoken against the bill. Yesterday, a pressure group led by former senator Rosana Tositrakul gathered outside Parliament and sent a representative to demand that the amendment to the Petroleum Bill be scrapped. 

Former deputy prime minister MR Pridiyathorn Devakula had also strongly opposed Article 10/1 on the grounds that it would hand control of national energy over to the military.

Supporters say a national oil company would serve as a state mechanism to manage the country’s oil and gas resources once existing concessions for the largest Erawan and Bongkot fields in the Gulf of Thailand expire in 2022 and 2023.

After refusing to answer questions from reporters on the issue yesterday ahead of the NLA vote, Prime Minister Prayut Chan-o-cha issued a written statement saying the government was not behind the move. He also pledged not to allow the military to play a leading role in managing petroleum resources.

He said the amended petroleum bill had earlier been endorsed by Cabinet for NLA passage because the government wanted to speed up private investment in the energy sector. 

According to the premier, existing concessions for both the Erawan and Bongkot fields, which account for a combined 70 per cent of the country’s indigenous sources of natural gas, are due to expire in the next few years, so the private sector needs sufficient lead time to make investment decisions based on the petroleum legislation.

The proposed amendment will allow the government to use multiple methods to boost financial benefits from these resources, including production-sharing contracts and service contracts in awarding the rights for natural gas exploration and production. 

At present, the government can only grant concessions to private oil and gas companies in return for royalties and other fees.

However, Nopporn Thepsithar, chairman of the Thai National Shippers Council, said he shared the opinion of Pridiyathorn. 

Earlier this week, Pridiyathorn issued a statement urging the NLA to review the amended Bill, arguing a national oil company would set back the country’s energy sector for decades. Critics said it would be redundant since there are existing state-owned oil and gas companies such as PTT and PTTEP, while there could be political abuses and inefficiencies in the future.

Meanwhile, the People’s Network for Thai Energy Reform submitted its petition to the NLA yesterday morning calling for a specific timeframe to establish a national oil company. The network stated it would boost financial benefits for the country once existing petroleum concessions in the Gulf of Thailand expire.

While defending the government’s integrity in reforming the energy sector, especially with regard to the proposed establishment of a new national company, the prime minister also threatened legal action against protesters opposing the new bill. He said his administration would not allow the military to be involved in the energy reform effort, as feared by critics.