LNG

Thailand’s state-run energy firm, Public Company Exploration and Production (PTTEP), has ramped up offshore domestic natural gas production and the nation is expected to require less LNG after last year’s surge of more than 32 percent in additional cargoes.

PTTEP said production has increased at the G1-61 gas project comprising the Erawan, Platong, Satun and Funan fields in the Gulf of Thailand.

The Thai company said that sales volume for the G1-61 project had now reached 800 million cubic feet per day (MMscf per day) as planned in a country were gas-fired generation is the main power source.

“The increased gas delivery will help lower electricity prices and enhance national energy security,” said PTTEP.

Domestic gas expansion

Montri Rawanchaikul, Chief Executive of PTTEP, noted that PTTEP won the bid for the G1/61 project in the Gulf of Thailand from the Department of Mineral Fuels in 2018 and signed the production sharing contract (PSC) in 2019.

“After becoming the operator, PTTEP put all its efforts into speeding up the production rate and improving the integrity of facilities and equipment to ensure safety,” Montri explained.

“To date, 12 wellhead platforms and subsea pipelines were installed, along with the drilling campaign of more than 300 producing wells,” he added.

“The gas delivery increased to 800 MMscf per day on March 20, 2024, to meet rising energy demand and support Thailand’s economy,” the CEO stated.

The natural gas supply for Thailand comes from a mix of domestic production sources, LNG imports and pipeline gas deliveries from neighbouring Myanmar.

The two Thai LNG import terminals have a combined six storage tanks and are operated by a PTTEP subsidiary, PTT LNG.

The LNG import facilities are called Map Ta Phut Terminal 1 and Map Ta Phut Terminal 2 with nominal capacities of 11.5 MTPA and 7.5 MTPA respectively.

The country imported 11.55 million tonnes of LNG in 2023, up more than 32 percent year-on-year from the 8.72MT received in 2022.

In addition to the rising natural gas production Thailand also imports around 588 MMcf per day of natural gas from Myanmar.

Analysts said that the outlook for LNG imports in 2024 could be more subdued than in 2023 owing to the Ministry of Energy's plans to minimize LNG deliveries and reduce power costs.

Gas priority

“Increasing natural gas delivery from the G1-61 Project has been PTTEP’s priority over the past two years,” CEO Montri said.

“As gas from the Gulf of Thailand is a primary source of energy serving both households and industries, PTTEP, therefore has accelerated all operations,” he added.

“This achievement is attributed to the determination of all employees and supports from the government and related agencies to not only mitigate the impact of energy prices but also sustain energy security for the country,” Montri declared.

PTTEP will continue its annual workplan by installing new wellhead platforms and drilling the hundreds of new wells for the G1-61 project.

The CEO stated that for 2024 funds of around 30 billion Thai baht ($830 million) had been set aside for the G1-61 project work plan as it was one of the primary sources of Thailand’s energy security.

Thailand’s state energy operator PTT Public Company Limited (PTT) has secured long-term liquefied natural gas volumes by signing a firm supply deal with the largest US exporter Cheniere Energy.

The PTT subsidiary, PTT Global LNG Company Ltd (PTTGL), signed the sale and purchase agreement with Cheniere to book cargoes from the Corpus Christi export plant in Texas.

Under the SPA, PTTGL has agreed to purchase 1 million tonnes per annum of LNG from Corpus Christi Liquefaction for 20 years beginning in 2026.

The agreement is for a combination of both free-on-board (FOB) shipments and delivered ex-ship (DES) cargoes.

“This customized structure represents a further evolution in Cheniere’s commercial offerings tailored to the specific needs of LNG customers around the world,” said the Houston, Texas-based company.

The purchase price for LNG under the SPA is indexed to the US benchmark Henry Hub natural gas price, plus a fixed liquefaction fee.

Auttapol Rerkpiboon, PTT’s President and Chief Executive, said that by year-end PTT’s LNG receiving capacity will increase with a new terminal in commercial operation.

New terminal

Thailand’s new Nong Fab LNG facility in Rayong province, the nation’s second onshore import terminal, has received first volumes of LNG for commissioning and is on track for full commercial start-up at the end of 2022.

PTT is expanding regasification capacity and LNG imports after completing several expansions at the single existing Thai import terminal at Map Ta Phut, which can now handle 11.5 MTPA.

The Nong Fab terminal is adjacent to the Map Ta Phut industrial area in Rayong and will have total regasification capacity of 7.5 MTPA.

“LNG as is a major transition fuel which supports both energy security and sustainability,” said PTT CEO Auttapol.

“Our ambition is to move forward with the future energy while ensuring energy security. We actively engage in the LNG business and target to be a global LNG player by managing an LNG portfolio of 9 MTPA by 2030,” he stated.

Jack Fusco, Cheniere’s President and Chief Executive, said he was pleased to enter into this 20-year SPA with a subsidiary of PTT.

“This is the first direct LNG contract from a US LNG producer for PTTGL, and this agreement not only reflects the critical need for long-term, reliable LNG supply across the globe, but also the important role LNG has to play in powering growing economies for decades to come,” Fusco declared. 

Thailand’s new Nong Fab LNG regasification terminal in Rayong province, the nation’s second import facility, has received first volumes of LNG for commissioning and is on track for full commercial start-up in 2022.

PTT Group, the national energy company of Thailand, is behind the Nong Fab project.

PTT is expanding regasification capacity and LNG imports after completing several expansions at the single existing Thai import terminal at Map Ta Phut, which can now handle 11.5 million tonnes per annum.

The Nong Fab terminal is adjacent to the Map Ta Phut industrial area in Rayong and will have total regasification capacity of 7.5 MTPA.

Thailand has opted for the more permanent onshore LNG terminals rather that a floating storage and regasification unit (FSRU), seen mainly as a fast-track energy solution.

The new terminal is currently being completed by Italian energy engineering firm, Saipem, and Taiwan-based CTCI Corp.

Saipem and CTCI were awarded the engineering, procurement and construction contract for the facility four years ago and with an estimated cost of around $900 million.

Experienced

It was Milan-based Saipem who announced the first volumes of LNG being introduced into the Nong Fab facility. The company is one of the world's most experienced LNG engineering firms with expertise in subsea, liquefaction and regasification projects.

“Saipem is pleased to inform that on 18 June the Nong Fab LNG regasification terminal, located in the Mueang Rayong district in Thailand and executed by Saipem in a joint venture with its partner CTCI, began offloading the first LNG from a carrier moored at the terminal jetty,” said the Saipem statement.

Saipem added that the scope of the work for the project, which began in July 2018, included two 250,000 cubic metres capacity LNG storage tanks, the regasification and pipeline eqipment and a six-kilometre trestle unloading facility as well as an administrative building.

“It is a particularly significant project which is marked by its tank capacity (the largest ever executed in Thailand) and by the world’s largest trestle in the LNG sector,” explained Saipem.

“The offloading of the first LNG was achieved thanks to the expertise, quality and efforts of Saipem’s team in Thailand as well as the strong support of the client, PTT LNG,” the company added.

Saipem stated that full commissioning and start-up were expected before year-end and would provide the country with a stable and reliable energy supply in response to increasing power demand in Thailand.

“The project, confirms Saipem’s role in the LNG and regasification sectors, thanks to its long-standing expertise in complex projects, which are always executed applying the highest safety standards,” Saipem declared.

Japanese energy group JERA Co Inc., one of the world's biggest importers of liquefied natural gas, has signed an accord with the main electricity grid operator of Thailand to cooperate on LNG and the energy transition.

One of the oldest registered companies in Thailand is making progress on developing its liquefied natural gas business with more imports while expanding its power business domestically and in Southeast Asia and elsewhere as earnings were hit by the rising natural gas price.

US major Chevron Corp. and French major TotalEnergies will both withdraw from Myanmar citing worsening human rights conditions, though the national energy company of Thailand will remain for reasons of energy security and to protect the regional power needs and jobs of ordinary people.

Thailand’s state-run exploration and production company PTTEP, which has stakes in Malaysian floating LNG and a Mozambican LNG project, reported almost 40 percent of growth in earnings in the first nine months due to higher natural gas output and prices.

Malaysian energy company Petronas has reported a fire at its main onshore liquefied natural gas production plant at Bintulu, located in the eastern state of Sarawak on the island of Borneo.

Thailand’s energy exploration and production company PTTEP, a shareholder in Mozambique LNG, has announced a second successive natural gas discovery at a field in Malaysian waters offshore Sarawak as the nation also aims to expand LNG imports because of growing power and industrial demand.

Demand for liquefied natural gas worldwide is forecast to hit 700 million tonnes by 2040 and Asia is expected to drive nearly 75 percent of this growth as Asian domestic gas production declines and LNG imports are used to tackle air quality concerns, according to the fifth Royal Dutch Shell annual outlook on LNG.

“For instance, China’s heavy-duty transport sector consumed nearly 13 million tonnes of LNG in 2020, almost doubling from 2018, to serve the fast-growing fleet of well over 500,000 LNG-fuelled trucks and buses,” the Shell report noted.

“LNG-fuelled shipping is also growing, with the number of vessels expected to more than double and global LNG bunkering vessels set to reach a total of 45 ships by 2023,” it said.

As demand grows, a supply-demand gap is expected to open in the middle of the current decade with less new production coming on-stream than previously projected.

“Just 3MT in new LNG production capacity was announced in 2020, down from an expected 60MT,” added the report.

Shell explained that because of the net-zero emissions targets companies are having to make, the LNG industry will need to innovate at every stage of the value chain to lower greenhouse-gas counts.

The Anglo-Dutch company noted that over the past year LNG prices hit a record low early in 2020 but ended the 12-month period at a six-year high as demand in parts of Asia recovered and winter buying increased against tightened supply.

“LNG provided flexible energy which the world needed during the Covid-19 pandemic, demonstrating its resilience and ability to power people’s lives in these unprecedented times,” said Maarten Wetselaar, Director at Shell for Integrated Gas, Renewables and Energy Solutions.

“Around the world countries and companies, including Shell, are adopting net-zero emissions targets and seeking to create lower-carbon energy systems,” he added.

“As the cleanest-burning fossil fuel, natural gas and LNG have a central role to play in delivering the energy the world needs and helping power progress towards these targets,” stated Wetselaar.

LNG trade increased to 360MT in 2020 and despite the “unprecedented volatility” caused by the Covid-19 pandemic the industry is moving towards a period of expansion.

China and India led the recovery in demand for LNG following the outbreak of the pandemic with both countries increasing their LNG imports by 11 percent.

“Demand in Europe, alongside flexible US supply, helped to balance the global LNG market in the first half of 2020,” said the report.

“However, supply outages in other supply basins, structural constraints and extreme weather later in the year resulted in higher prices,” it added.