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In Another "Great Leap Forward," Chinese Firm Finds Oil in Thailand's Northeast

As seemingly omnivorous Chinese energy firms encircle the globe looking for exploitable hydrocarbon reserves, one firm is searching close to home.

Shaanxi Yanchang Petroleum Corp. Ltd has started exploring for oil On Thailand's Thung Kula Rong Hai 1,235 square mile plateau, which covers the country’s four northeastern provinces.

Shaanxi Yanchang Petroleum Corp. Ltd is focusing its exploration efforts in Thung Kula Rong Hai’s Chumphon Buri district in Surin province.

Village forums and public hearings are being conducted throughout the Chumphon Buri district, and an environmental impact assessment (EIA) is expected within three months.

While many such proposed energy projects encounter stiff resistance from those living there, some Chumphon Buri district residents are now eager to sell their land holdings for a high price.

Chumphon Som-ngam, the deputy village head of Ban Khok Klang in the Tambom sub district in Chumphon Buri said, "We are in the process of public hearings and village forums. We have to ask whether local people in three affected sub districts agree with the petroleum exploration and production. To date, the locals have already expressed concerns about adverse impacts from drilling rigs. A team from the Shaanxi Yanchang Petroleum Corp. Ltd has already come to explore the target sites at Ban Khok Klang. I think it will install drilling rigs soon."

A major concern among farmers in Thung Kula Ronghai’s Surin's Chumphon Buri district is that the area has long been famous for its jasmine rice, which has brought large amounts of money to local rice farmers each year. Accordingly, the local residents worry that if petroleum exploration and production begin in their area on a serious level, they may eventually lose all their paddy fields.

According to the China-ASEAN Expo Secretariat, in January 2010 China was Thailand’s second largest trade partner after Japan, becoming both Thailand’s second largest export market and its second largest source of imports.

In 2010, bilateral Chinese-Thai trade reached $46 billion, an increase of more than 30 percent over 2009 statistics. The 2010 figures saw exports from Thailand to China rise 34 percent to $21 billion, while Thai imports from China were up 43 percent to $25 billion.
Chinese exports to Thailand included computer components, electrical motors, consumer electronics, machinery, metal products, chemicals, clothing, electromechanical products, hi-tech products, textiles and farm produce, while Thai exports, worth $33.2 billion, consisted of computer components, electromechanical products, hi-tech products, refined and crude oil, plastic pellets, chemicals, electronics, natural rubber, farm produce and wood products. Thailand's industries with comparative advantages, such as food, agricultural products, light industrial products and rubber materials and products have captured increasingly larger market shares in China.

Why the dramatic rise?

According to Beijing, two things.

First, the 2003 Free Trade Agreement, which covered agricultural products.

But, more recently, Chinese-Thai bilateral trade has soared because of the "zero tariff" preferential policies embodied in the China- Association of Southeast Asian Nations (ASEAN) Free Trade Area (ACFTA) agreement, have effectively boosted the trade between China and Thailand.

ACFTA was signed on 4 November 2002 in Phnom Penh, Kampuchea, to establish a free trade area among the eleven ASEAN countries nations by 2010, with the free trade area coming into effect on 1 January 2010.

Hence the rise in Chinese-Thai trade. The ASEAN–China Free Trade Area is the world’s largest free trade area in terms of population and third largest in terms of nominal gross domestic product (GDP), and rising fast.

Down the road, China has expressed its intention to create the China City Complex in Thailand, both to boost bilateral trade and evade both ASEAN regional trade barriers as well as provide entry into other large foreign markets with which Thailand has trade agreements, such as the United States and European Union.

And, the jasmine rice farmers in Thung Kula Ronghai’s Surin's Chumphon Buri district?

Another tale for another time.

By. John C.K. Daly of Oilprice.com

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