Bangkok Post (Thailand): LNG talks with Iran hit snag over prices

Published: Sep 11, 2007

PTT Plc, the state-owned energy conglomerate, expects its liquefied natural gas (LNG) price negotiations with Iran to be delayed for six months, leading contracts to be postponed to mid-2008, according to executive vice-president Chitrapongse Kwangsukstith.

The Energy Ministry signed an agreement in principle in July 2006 with the Oil Ministry of Iran to purchase LNG from the Pars LNG site.

At that time, the selling price negotiation was expected to be finalised in June 2007, with contracts signed before the end of this year.

The problem stemmed from the increasing construction costs of Iran’s petroleum field, resulting in rising natural gas costs.

“Our partner is expected to pass those higher costs to selling prices, so the negotiation between us is prolonged again and again,” he said.

PTT plans to import three million tonnes per year of LNG from the Pars site, a joint venture of National Iranian Oil Co, TotalFinaElf and Petronas.

PTT decided to start importing LNG more than three years ago to meet rising demand for electricity production and alternative fuel for vehicles.

Thailand aims to import three million tonnes per year of Iranian LNG during 2011-12, and another two million tonnes per year in 2013-14. Afterward, PTT plans to import another five million tonnes per year from other operators.

Although it has yet to secure supply contracts, PTT continues to build LNG support facilities, including a receiving terminal and depot in Map Ta Phut worth US$700 million. It is expected to be completed by 2010.

However, PTT is seeking other LNG supply deals with Algeria, Australia, Egypt and South Africa as the talks with Iran could fail.

PTT’s affiliate, PTT Exploration and Production Plc, would need to take part in the plan, said PTTEP president Maroot Mrigadat. The company plans to increase petroleum production output from its three gas fields in the Gulf of Thailand to 1,030 million cubic feet per day (mmcfd) by 2011 from 630 million mmcfd now to offset delayed LNG supply.

PTTEP is in the process of seeking approval from the Energy Ministry to extend licences for those three blocks by another 10 years from when they expire in 2012. The capital for the investment is still under discussion.

In addition, another four petroleum fields in Oman also need extensions approved soon as they are due to expire in a year. These are currently operated by PDO, a consortium of PTTEP, the Omani state oil company and Royal Dutch Shell.

Its parent also requires the company to speed up exploration work in other fields to enable it to promptly begin production. It has just completed the exploration process in block B17 in the Joint Development Area, M9 in Burma and at the South of Bongkot field.

PTT shares closed yesterday on the SET at 312 baht, unchanged, in trade worth 1.07 billion baht.

This website and sisters royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.