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Tim Daiss

Tim Daiss

I'm an oil markets analyst, journalist and author that has been working out of the Asia-Pacific region for 12 years. I’ve covered oil, energy markets…

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Thailand Pivots To Renewables As Gas Dries Up

Thailand’s natural gas depletion problems are causing the southeast Asian country to make significant changes to its energy mix. The capacity of non-hydro renewables in Thailand may expand to 21 percent of the country s total power capacity mix at 14,858 MW by 2028, according to a recent report by Fitch Solutions. The report projected that capacity growth in the renewables sector to be robust over the next decade, mostly driven by the biomass and solar sectors as the country mitigates the loss of its natural gas reserves.

“This view is also informed by our expectation that coal-fired power growth will stagnate amidst popular opposition, meaning that there are ample opportunities for renewables as the Thai government seeks to deliver increased power sector investment to meet rising electricity demand in the country,” Fitch Solutions added. The Fitch report also highlighted how local authorities are aiming to raise the share of renewable energy from 10 percent to 30 percent in the domestic power mix by 2037 through the country’s Power Development Plan (PDP2018-2037). 

Though Thailand is going long on renewables, it is still planning to invest $11.3 billion (354.7 billion baht) over the next five years to boost its natural gas portfolio and energy infrastructure, Thai state-owned energy firm PTT said last week at a news conference. The Bangkok-based company plans to invest 167.1 billion baht from 2019 to 2023, of which 44 percent will be allocated to expand its gas business and firm up infrastructure, the state-owned oil major said. “We want to become a global LNG portfolio player ... and build an LNG value chain,” a spokeswoman said, adding that the company’s upstream arm, PTT Exploration, and Production, would acquire assets while other units would focus on building LNG import terminals, liquefaction and regasification plants. Related: Empty Supertankers Speak Volumes About The Oil Market

PTT added that natural gas is becoming a primary energy source for Thailand because it is easier to transport, cleaner and has lower costs. It said that PTT also set aside an additional 187.6 billion baht to invest in new technologies and expand its core business should opportunities arise. “We have to build energy security for the country and also add value to from our petrochemical products,” it added. Areas of investment include expansion of petrochemical products capacity and its electricity business.

As part of Thailand’s effort to develop its LNG sector, PTT said last month that it is planning to start an LNG trading desk in Singapore to expand its trading activities of the super-chilled fuel. Singapore is becoming a regional trading hub for the super-cooled fuel, but in time will also face competition from Tokyo and possibly Singapore as regional LNG trading hubs.

Running out of gas

Thailand’s natural gas reserves have continually declined since 2006. The country’s gas production peaked in 2014 and has also declined since then, according to the US Energy Information Administration’s latest analysis of the country’s energy sector. The Thai government anticipates an overall decline in output if there are no new discoveries in the next few years. Unless Thailand can attract more exploration investment and replace reserves at a faster rate, it will increasingly rely on natural gas imports, the EIA added. Last week, PTT reported a net profit of 119.7 billion baht for 2018, down 11.5 percent from a year earlier. Gas accounted for about a third of operating income, bringing in 76 billion baht, up 12.8 percent.

Thailand’s interest in procuring more LNG will help soak up extra supply hitting markets in the Asia-Pacific region which accounts for 72 percent of global LNG demand. This new supply will be mostly coming from Australia, the US and Qatar - which will all compete for the slot as the world’s top LNG exporter within the next several years.

By Tim Daiss for Oilprice.com

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