Thailand: PTTEP, Chevron Yet to Reach Deal on Erawan Offshore Gas Field

Chayut Setboonsarng
Tuesday, August 10, 2021

Thai oil and gas company PTT Exploration and Production Pcl (PTTEP) said last Thursday it had not yet been able to reach an agreement with Chevron about accessing the Erawan gas field in the Gulf of Thailand before it takes over the concession from the U.S. oil major next year.

State-backed PTTEP had wanted to access the field this year to set up operations in preparation for starting production there next year.

Transitions between concessions on oil fields are often collaborative, but delays in talks between PTTEP and Chevron come amid a dispute between Chevron and the Thai government over who should pay for removing offshore assets in the gas field.

"We have not received an official reason, but talks have resumed and we hope for a conclusion," Maylada Chayavadhanangkur, head of PTTEP's Erawan (G1/61) transition team told reporters.

“We don't know if they are connected,” Maylada said when asked if the access issue was related to Chevron's dispute with the Thai government.

A Chevron spokesperson said in an e-mail to Reuters that it would continue to engage with PTTEP and the Department of Mineral Fuels (DMF) on solutions to support the transition with progress made in activities such as facility and operation transfer.

The companies had agreed on access in 2019 on site access for survey work, he added.

Thailand's DMF did not respond to a request for comment.

PTTEP, a unit of state-owned PTT Pcl, had planned to conclude an access agreement last year and will now probably have to postpone plans to next year when its concession begins, Maylada said.

Negotiations are ongoing, however, and the company hopes for clarity within the next two months when it could still start preparations.

“We have this and next month - and then March-April next year because we cannot do these things during monsoon season due to safety concerns,” she said.

PTTEP’s plan was to setup eight platforms and pipes in the first quarter of 2021, then begin drilling by the second quarter to add production capacity.

“We were preparing so that on the first day we can produce 800 million cubic feet of gas per day (MMSCFD) right away,” she said.

Under the new concession terms with the Thai government, PTTEP must deliver 800 MMSCFD.

Chevron, which lost out to PTTEP in an auction in 2018 for the new concession, has operated the Erawan field for decades.

PTTEP expects the field to have a capacity of 500 MMSCFD when Chevron relinquishes its concession and the Thai company has said it would find other sources, including the Bongkot and Arthit fields if Erawan could not reach 800 MMSCFD due to the delays.

Chevron's dispute with the government centers on Thailand's request that Chevron pay the full decommissioning costs of around $2 billion for assets in the Erawan gas field, including those it will hand over to PTTEP.

Chevron argues that, under the terms of its initial contracts from 1971, it is only liable for infrastructure that is no longer deemed usable and the transferred assets are the responsibility of the new operator. 

(Reporting by Chayut Setboonsarng; Editing by Susan Fenton)

Categories: Production Asia Gas

Related Stories

ADNOC Approves $6.2B Offshore Umm Shaif Gas Project

Jadestone Energy Lifts Malaysia Production with Second Online Well

Hormuz Crossings Decline as US Renews Iran Blockade

Oil Rises 2% as Middle East Hostilities Escalate

Unity Enters Asia-Pacific Market with Malaysia P&A Work

Noble Gets $136M Brunei Drillship Job

Tetragon Energy Advances Oil and Gas Exploration Activities off Philippines

Oil Jumps 3% on Renewed US-Iran Conflict

ONGC Plans Major New Indian Oil Reserve

Markets: Oil Majors Reload Exploration Hoppers Across Sub-Saharan Africa

Current News

Saipem Cuts Earnings Outlook as Middle East Costs Rise

Serica Energy Agrees $194M Pharos Energy Acquisition

Oil Eases After Topping $100, Still Set for Weekly Rise

BP Moves Indonesia CCUS Project Into Offshore Installation Phase

Eni-Petronas JV Starts Indonesia-Bound FPSO Construction

QatarEnergy Prolongs LNG Force Majeure, Charters Out Tankers

Chevron Enlists Velesto’s Jack-Up Rig for Drilling Job off Malaysia

ABL Gets Papua New Guinea FSO Job

Energean Lifts Karish Fields FPSO Oil Processing Capacity

Oil Rises on Dual Shipping Threat in Hormuz and Red Sea

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com