Update: PTTEP beats Chevron to Erawan, Bongkot field operatorship

(Update: Adds Chevron’s statement)

Thailand’s PTTEP oil and gas company has won the rights to operate two offshore blocks in Thailand containing the producing Erawan and Bongkot gas development, beating bids made by the U.S. major Chevron.

Worth noting, the two companies have already acted as operators of the above-mentioned fields; Chevron as the operator of Erawan, and PTTEP as the operator of Bongkot.

They then in September filed bids hoping to take over the acreage they didn’t have and at the same time to hold on to the acreage they already operated. According to a statement on Thursday, PTTEP emerged victorious, filing winning bids for both fields.

PTTEP on Thursday said it was ready to continue the operatorship in the Bongkot gas field and to become the operator in the Erawan field starting from 2022.

“The company will move forward with the field development plans to ensure continuity in natural gas supply for the country’s energy security,” PTTEP said.

Phongsthorn Thavisin, PTTEP Chief Executive Officer said: “Throughout 20 years of experience in operating the Bongkot field, and as a joint venture partner in the Contract 3 project which covers major area of the Erawan field, PTTEP has accumulated a sound technical understanding of both fields.

“Our proposed development and investment plans will enable us to produce natural gas at the required production levels of at least 700 million cubic feet per day (MMSCFD) and 800 MMSCFD from the Bongkot and Erawan fields respectively during the Production Sharing Contract regime.

“For the Bongkot field in which PTTEP is the existing operator, we are able to immediately invest to deliver the committed production level, while we have workplan and investment plan for the Erawan field during the operatorship transfer. We expect good support from the existing operator, the Department of Mineral Fuels and government agencies so that we can start the required activities immediately to ensure the continuity of natural gas supply.”

‘Deeply disappointed’

In an email sent to Offshore Energy Today, Chevron said: “Chevron Thailand Holdings Limited (CTHL) is deeply disappointed that it was not the preferred bidder for the Erawan and Bongkot blocks. Chevron submitted credible, sustainable bids built on our deep experience operating in the Gulf of Thailand.

“Our bids allowed for the necessary investment to maximize recovery of Thailand’s resources. We respect the decision of the government and remain committed to delivering energy safely and reliably to the Kingdom of Thailand.”

Pairoj Kaweeyanun, President CTHL, Chevron’s Thai subsidiary, said: “Our talented Thai personnel have made a significant contribution to the energy security of the Kingdom of Thailand for more than half a century and should be proud of their achievements.”

Woodmac: Major loss for Chevron

Commenting on the outcome of the two companies bidding for one another’s offshore acreage, Wood Mackenzie’s research analyst Jean-Baptiste Berchoteau said: “This confirms PTTEP’s strategy to secure domestic gas supply and increase its reserves in the country. The low gas price constant value offered by PTTEP (3.55 US$/mmbtu) truly reflects the national oil company’s (NOC) ambition to beat the competition and satisfy DMF’s intention to offer more affordable gas.

Berchoteau said Thailand’s Department of Mineral Fuels should be commended for leading the bidding round successfully and ahead of schedule, “a big achievement for a country usually known for approval delays.”

He also said the outcome was the second major loss for Chevron in South East Asia after it lost its Rokan asset to Pertamina in Indonesia earlier this year.

“Chevron’s reserves and production in the region is now expected to fall drastically post-2022 and South East Asia could become a non-core region for the Major,” Berchoteau said.

He said: “This also confirms a trend that Wood Mackenzie identified last year where we anticipated a progressive retreat of the Majors from South East Asia, opening a gap we expected to be filled by regional NOCs.

“Chevron’s focus will most likely now turn towards the Permian play in the US where the company recently announced it will increase its budget by 10%.

“Many uncertainties are still to be clarified, such as the transfer of liabilities and decommissioning between Chevron and PTTEP, the guarantee of a smooth operatorship transition between the two companies and the level of CAPEX that Chevron will dedicate to develop Erawan until 2022.”

Offshore Energy Today Staff