Report : Energy Development in Thailand
1997

 

 

In the early 1980s most of Thailand's commercial energy requirements were met by imports. Of the total demand, imported energy accounted for over 90 per cent, mainly in the form of petroleum. As a consequence of this, the Thai government has seriously stepped up its efforts to explore domestic energy resources.

The development of indigenous energy resources during the past decade has greatly reduced the country's reliance on imported energy. The share of energy imported for commercial energy requirements decreased from 90 per cent in 1980 to 65.5 per cent in 1996. The country's energy sources have also been diversified. In 1996, commercial energy demand was about 1,122,100% barrels per day (bpd) of crude oil equivalence. Of the total commercial energy consumption, natural gas accounted for 20.6 per cent, while coal/lignite and hydropower accounted for 15.2 per cent and 3 per cent respectively. The remaining 61.2 per cent was based on petroleum products. To give the actual overall picture, it should be mentioned that traditional energy, such as charcoal and fuelwood, still plays an important role in rural areas. At present, traditional energy consumption is at a rate of 240,000 bpd of crude oil equivalence but is being rapidly replaced by modern energy.

Rapid economic growth and the transformation from an agricultural and resource based economy to a more dynamic export-led-economy which combines agriculture, agro-industry, manufacturing, and services, has contributed to the country's higher energy demand. In order to procure enough energy to meet future requirements, Thailand will need substantial investment over the next decade. Petroleum and lignite exploration and production are being stepped up. Meanwhile, Demand Side Management (DSM) and Energy Conservation Programs are being vigorously pursued to reduce capital investment in the energy sector and to reduce negative environmental impact. Moreover, Thailand is now actively seeking opportunities to explore and develop petroleum resources in neighboring countries.

Natural Gas Exploration and Production

Huge reserves of natural gas and condensate have been found in the Gulf of Thailand in the Unocal concession and the Bongkot Field. Their proven reserves are estimated at 5.74 trillion cubic feet (tcf) of natural gas and 127 million barrels of condensate. Currently, gas from both concessions is piped to the Eastern Seaboard. The Petroleum Authority of Thailand Exploration and Production (PTTEP), subsidiary of the Petroleum Authority of Thailand (PTT), took the lead in investing in the Bongkot Gas Field in cooperation with Total Exploration and Production Thailand, British Gas Thailand Ltd., and Statoil (Thailand) Ltd. Natural gas has also been found onshore by Esso Exploration and Production Khorat Inc. in Khon Kaen province where the proven gas reserves are estimated at 0.24 tcf.

Since September 1981, a 425-kilometre submarine pipeline has brought gas from the Gulf of Thailand to the Electricity Generating Authority of Thailand's (EGAT) power plants at Bang Pakong in Chachoengsao province, Rayong province, and South Bangkok. PTT built its first natural gas separation plant in 1984, with its second completed in 1990. In early 1991, Esso Khorat came into full operation, with dry gas from Namphong Field in Khon Kaen province. All gas production came on stream to supply the EGAT's 359 megawatt (MW) gas-fired combined cycle power plant, situated three kilometers away from the field.

In 1996, Thailand produced 1,270 million cubic feet per day (mmcfd) of natural gas, and 35,736 bpd of condensate. Unocal Thailand, Ltd. and its partners produced gas and condensate at an average rate of 808 mmcfd and 27,950 bpd respectively from their 11 fields in the Gulf of Thailand: Erawan, Baanpot, South Satun, Satun, Platong, Kaphong, Surat, Funan, Jakrawan, Gomin, and West Jakrawan. Thai Shell Exploration and Production Co., Ltd. produced gas from its onshore Sirikit and other nearby fields at an average rate of 61 mmcfd, while Esso Khorat produced gas from Nam Phong gas field at an average rate of 65 mmcfd. Total produced gas and condensate from Bongkot gas field ran at an average rate of 337 mmcfd and 7,824 bpd respectively during the period 1993-1996.

Given the rapid increase in demand for natural gas, it is apparent that there will be an excess demand well into the next century. Consequently, Thailand has started to seek joint development opportunities for petroleum resources in neighboring countries. The PTTEP has undertaken investment in Myanmar. Additionally, a Joint Development Authority has been established with Malaysia to develop the Joint Development Area (JDA), an area in the Gulf of Thailand claimed by both Thailand and Malaysia. Furthermore, Thailand is also examining the potential of importing liquefied natural gas (LNG) from potential sources such as Qatar, Oman, Brunei and Australia.

Gas Pipeline System

The Petroleum Authority of Thailand's (PTT) current natural gas pipeline system in the Gulf of Thailand has the capacity to transport approximately 1,800 mmcfd's of natural gas onshore. However, this capacity will not be able to accommodate the projected increase in demand from 1999 onwards. The demand of natural gas for the use in power generation and in the industrial sector is expected to increase to 3,658 mmcfd by the year 2005. Additionally, it is expected that natural gas imports from the Thailand-Malaysia Joint Development Area (JDA) will commence by this time.

Consequently, PTT has developed a Natural Gas Pipeline System Master Plan (1997-2005). According to this plan, an expanded natural gas pipeline system will increase transportation capacity by about 2,000 mmcfd. When added to the capacity of the existing gas pipeline system, the total gas transportation capacity will reach 3,800 mmcfd. This is deemed sufficient to satisfy the demand over the next nine years, i.e. up to the year 2005.

So far, PTT has been the sole purchaser, supplier and transporter of natural gas, with the pipeline tariff being regulated by the government. To introduce competition into the natural gas supply industry, the government will restructure PTT to form two entities; one taking on the role of natural gas transporter, with the other being a natural gas purchaser and supplier.

Oil Exploration and Production

The Defence Energy Department's Fang oilfield has been in operation since 1963. Its current production is about 1,200 bpd. A concession held by Thai Shell Exploration and Production Co., Ltd. in the North contains approximately 44 million barrels of crude oil. With the discovery of crude oil at Sirikit Field in the early 1980's, Shell has been producing crude oil at a rate of 23,000 bpd. Other on-shore reserves include those discovered by British Petroleum Company p.l.c. (concession later transferred to PTTEP), North Central (concession later transferred to SINO-U.S.) and Petrocorp (concession later transferred to Cairn Energy Far East) in Nakhon Pathom, Suphan Buri, Phitsanulok, Phetchaboon and Sukhothai provinces.

In 1987, Shell discovered oil off the coast of Chumphon province in the Gulf of Thailand. Production began in 1988 but technical problems caused a temporary closure of the field. Production resumed in September 1994 with a capacity of 6,000 bpd. In 1988, another oil field was discovered off the coast of Songkhla province. By 1996, Thailand's crude oil production was running at 26,492 bpd.

Coal Exploration and Production

Most of the coal found in Thailand is of lignite and sub-bituminous types. The main reserve, the Mae Moh mine, an open-pit mine located in the North and operated by the Electricity Generating Authority of Thailand (EGAT), measures 1,300 million tons of lignite. The second largest reserve, the Krabi mine in the South, measures 112 million tons of lignite. Lignite from these two basins is used solely for electricity generation.

In 1996, domestic coal production was 21.7 million tons, 75 per cent of which came from EGAT's mines. To date, in addition to the state enterprise EGAT, the local private sector has taken part in coal production from other basins throughout Thailand. These basins are Li, Mae Than, Mae Chaem, Mae Lamao, Bo Luang, and Na Duang. The first three of these are the main productive basins. Also part of the Chiang Muan basin is operating and the Nong Ya Plong basin re-opened in early 1997, after five years' suspension. Coal from these privately developed sources is used mainly for fuel in the cement industry, the food industry and in the tobacco-curing process, as well as for power generation.

Oil Refineries and Marketing

The five oil refineries in Thailand include the partly government-owned Bangchak Petroleum Public Company Ltd. (Bangchak), the Thai Oil Company, 49 per cent of which is owned by PTT, the Esso Refinery, the Rayong Refinery Company Ltd., and the Star Petroleum Refining Company Ltd. The construction of the Rayong and Star refineries was completed between mid-1995 and early 1996. The oil production in the first half of 1997 of these five refineries is as follows: Bangchak, 98,000 bpd; Thai Oil, 191,000 bpd; Esso, 139,000 bpd; Rayong, 117,000 bpd; and Star, 123,000 bpd. The total refining output of 668,000 bpd exceeds the domestic demand.

Thailand's 563,000 bpd petroleum market is dominated by four major oil companies. Listed in descending order of market share, these are PTT, Esso Thailand Public Company Ltd. (Esso), the Shell Company of Thailand Ltd. (Shell), and Caltex Oil (Thailand) Ltd. (Caltex). These four oil companies control about 76 per cent of the petroleum market which is currently running at 563,000 bpd. The rest of the market is supplied by a number of small oil companies and independent suppliers.

With government deregulation of the oil market, other oil companies have entered the Thai petroleum market intensifying domestic competition. These include the Bangchak Petroleum Public Company Ltd. (Bangchak), Mobil Oil Thailand Ltd. (Mobil), BP Oil (Thailand) Ltd. (BP), Kuwait Petroleum (Thailand) Ltd. (Q8), and Conoco (Thailand) Ltd. (Conoco). Oil price controls, except on Liquid Petroleum Gas (LPG), were repealed in August 1991.

The relatively large oil market in Thailand has imposed considerable stress on the country's transportation infrastructure. To deal with this, two multiproduct pipelines have been constructed. The Thai Petroleum Pipeline Co., Ltd. (THAPPLINE) operates a pipeline from Sriracha in Chonburi province to Saraburi province, while the Fuel Pipeline Transportation Ltd. (FPT) operates a pipeline from Chongnonsri in Bangkok to Bang Pa-In in Ayutthaya province. These two operating pipeline projects, which replace the oil tankers previously used for fuel transportation have significantly alleviated road and rail congestion in Bangkok and its vicinities.

Petrochemical Industry

The Royal Thai government, through the Petroleum Authority of Thailand (PTT) has taken a leading role in the development of the petrochemical industry since 1989. This development can be divided into three phases, the National Petrochemical Complex 1 (NPC-I), the National Petrochemical Complex 2 (NPC-II) and the National Petrochemical Complex 3 (NPC-III). In addition to government involvement, the private sector has also contributed significantly to the development of this industry. For example, the Thai Petrochemical Industry Public Co., Ltd. (TPI) has been developing petrochemical production and has become a major producer of downstream petrochemical products. Also the Thai Cement Group, the Bangkok Bank Group, the CP Group, and the TOA Group are all involved in the upstream, intermediate and downstream stages of the petrochemical industry.

Electricity Generation and Distribution

The total domestic generating capacity in 1996 was 16,219 megawatts (MW), producing 87,797 gigawatt (GW) hours of electricity. Almost 42 per cent of this volume was generated from indigenously produced natural gas, while approximately 20 per cent was produced from domestically mined lignite. The rest was produced from fuel oil (24 per cent), diesel (5 per cent), hydropower (8 per cent), and other sources (1 per cent). The success of the rural electrification program is reflected in the fact that 98 per cent of all villages in Thailand have been electrified. Electricity is currently supplied to over 11 million users throughout the country.

With the rapid increase in power demand, investment in the power sector accounts for the largest share of the energy sector's investment program. Annual investment in power generation alone amounts to nearly US$ 2.0 billion. The size of the investment program, together with a prudent government fiscal policy and a long-term strategy to create greater competition in the power supply industry, has led to a major shift in power sector policy. The electricity supply industry is now being deregulated to allow “Small Power Producers (SPP)” and “Independent Power Producers (IPP)” to generate and sell electricity to the electricity utilities. Some of the Electricity Generating Authority of Thailand (EGAT)'s existing power plants will also be privatized.

To accommodate the continuous increase in power demand, EGAT has started purchasing electricity generated from both IPP and SPP private producers. Between 1996 and 2003, EGAT is expected to purchase power from seven IPP projects, with a total capacity of 5,800 MW.

Small Power Producers are those which use renewable energy or waste materials as fuels, or those which generate power using the energy efficient co-generation system. It is expected that there will be around 60 SPP projects operating in the power system by 2001, with a total generating capacity of approximately 5,000 MW. Of this amount, about 2,500 MW would be supplied to EGAT's grid.

The privatization of EGAT's operation has included the divestiture of some of EGAT's existing power plants through the Stock Exchange of Thailand (SET). An EGAT subsidiary company, the Electricity Generating Company Limited (EGCO), is responsible for generating and selling electricity to EGAT. In the first stage, EGCO purchased the 1,232 MW Rayong Power Plant and the 824 MW Khanom Power Plant from EGAT. EGCO was transformed into a public company on 23 March 1994 and its shares were listed on the SET in 1995.

In the immediate future, the other EGAT thermal power plants are expected to be corporatized into 3 companies which will later be privatized. EGAT will become as a transmission company but will retain their hydro-power plants. In the medium term, EGAT will be the purchaser of power from various private power companies under long-term power purchase agreements. In the longer term, third party access and retail competition will be introduced.

Energy Co-operation with Neighboring Countries

Since Thailand is not well endowed with indigenous energy resources, the development of energy resources, including natural gas and hydropower, jointly with neighboring countries is an important policy direction. Strategies include the joint development of natural gas resources with Malaysia in the Joint Development Area (JDA), importing natural gas from Myanmar and Indonesia as well as the purchase of electricity from the Lao PDR, China, Myanmar and Malaysia.

The government policy towards natural gas is to import this resource from neighboring countries. Natural gas imports from the Union of Myanmar will amount to 525 mmcfd from the Yadana field by 1998 and 211 mmcfd from the Yetagun field by the year 2000. The development of natural gas resources in the Thailand-Malaysia Joint Development Area (JDA) is expected to reach 76 mmcfd by 1999 and will increase up to 1,005 mmcfd by 2004. Additionally, it is expected that natural gas will be purchased from the Natuna field in Indonesia as well as the exploration and development of natural gas resources on the Thai-Cambodian border and the Thai-Vietnamese border.

Thailand is also collaborating with the Lao PDR, China, and Myanmar in hydropower development. In 1993, the government of the Lao PDR agreed to supply to Thailand up to 1,500 MW of electricity by the year 2000. During the first stage, from 1998-2002, 921 MW of electricity will be supplied to Thailand from 3 hydropower projects, the Theun-Hin Boun (187 MW), the Houay Ho (126 MW) and the lignite-fired project at Hong Sa (608 MW).

On 19 June 1996 the governments of Thailand and the Lao PDR jointly signed a Memorandum of Understanding (MOU) on the purchase of power from the Lao PDR. This MOU increases the purchase capacity originally agreed in 1994 from 1,500 MW to 3,000 MW by 2006. The additional power will be purchased from three projects currently under development, Nam Ngum 2 (300 MW), Nam Ngum 3 (400 MW), and Xe Pian and Xe Namnoy (339 MW). Additionally, an MOU between Thailand and the Union of Myanmar was signed on 4 July 1997 purchasing 1,500 MW of power by the year 2010.

The possibilities for purchasing power from China is very promising as the Southern Chinese province of Yunnan has high hydro resource potential. The Jinghong Project, with an installed capacity of 1,500 MW, is currently under feasibility study by the MDX Power Public Co., Ltd. Thailand also has developed a plan to exchange power with Malaysia in the form of emergency power (300 MW) through the high voltage direct current (HVDC) tie-line in 1999.

Energy Efficiency and Energy Conservation

Demand Side Management Program

The Demand Side Management (DSM) Program is a new strategy officially launched in September 1993 to promote energy conservation and the efficient use of electricity by all consumers. The five-year DSM Master Plan (1993-1997) has been implemented by EGAT's newly established Demand Side Management Office (DSMO) in close collaboration with two electricity distributing authorities, the Metropolitan Electricity Authority (MEA) and the Provincial Electricity Authority (PEA). The initial saving goal was to reduce 238 MW of peak demand and 1,427 GWh of energy, however, the first year of DSM implementation showed a much greater potential for energy savings than originally estimated. After the fifth year of implementation, it is projected that the DSM program can reduce 311 MW of peak demand and 1,826 GWh of energy.

The DSM Program consists of six major sub-programs. These are the Residential Program, Commercial/Governmental Building Program, Industrial Sector Program, Load Management Program, Energy Conservation Attitude Promotion Program, and Program Monitoring and Evaluation. The first three programs focus on energy-efficient appliances, particularly lighting equipment, high-efficiency refrigerators and air-conditioners, and high-efficiency motors.

In September 1993, EGAT negotiated a voluntary agreement with the five major local manufacturers who supply 95 per cent of the fluorescent lamp market, to switch their production to the new “thin tube” (18W and 36W). Another DSM program was launched to introduce Energy Efficiency labeling for refrigerators. With co-operation from major refrigerator manufacturers, energy-efficiency labels have been applied to their new products effective from January 1995. Refrigerators of 5-6 cubic feet sizes were selected to commence the initiative. Through this program, customers are encouraged to use the higher energy-efficiency products. A similar labeling program for air conditioners began in early 1996. All 55 air conditioner manufacturers have joined the testing and labeling program and it is evident that consumers are attracted by energy-efficient air-conditioners.

EGAT launched its “Green Buildings” program in September 1995, and by early 1996, owners of more than 180 large commercial buildings were participating. Emphasis is placed on energy savings and the improvement of energy performance in buildings. To overcome the cost barrier to the installation of more energy-efficient equipment, EGAT provides building owners with a interest free loan which is repaid over three to five years.

In early 1996, the high-efficiency motor program was launched. EGAT is offering industrial customers a savings incentive of US$440 per peak kilowatt (kW) when they purchase energy-efficient motors. This program is complemented with the establishment of a motor-efficiency testing center and a motor rewinding efficiency program.

Energy Conservation Promotion Act and Fund

The Energy Conservation Promotion Act (the Act) was passed by the Royal Thai Government in March 1992. This Act is seen as innovative as it blends incentives with mandatory regulations to facilitate the implementation of mandated energy-efficiency measures. The Energy Conservation Promotion Fund was established to provide financial support to government agencies, state enterprises, non-government organizations, individuals, and businesses who wish implement measures to increase efficiency in energy utilization.

Implemented under the Act are:

The Compulsory Program relates to the legislative and regulatory implementation of energy conservation implementation. It involves designated factories and buildings as well as other buildings whose owners demonstrate an interest in energy conservation.

The Voluntary Program includes: the Rural and Small Industries program, the Research and Development program, and the Industrial Liaison program. As example of projects promoted by the Fund, a biogas project utilizing pig manure and electricity generation using methane gas from a municipal waste site (landfill) have been implemented.

The Complementary Program involves the provision of education and training programs on energy conservation for concerned personnel. A public relations exercise is being undertaken to change consumers' behavior and to achieve energy saving objectives.

Energy and Environment

As the use of energy contributes to environmental problems, particularly air pollution, in the Bangkok metropolitan area, the government has introduced several measures to address this. Government initiatives include the improvement of gasoline quality, the introduction of vehicle emission standards and vehicle inspection and maintenance programs.

Unleaded gasoline was introduced in May 1991 and is now available throughout the country. The mandatory installation of catalytic converters in all new gasoline vehicles became effective in 1993. Regular leaded gasoline which previously contained 0.15 gram per liter of lead was replaced by regular unleaded gasoline in August 1994 and a complete phase-out of leaded premium gasoline has been in force since 1 January 1996. Also, the sulfur content of diesel oil was reduced from 0.5 per cent to 0.25 per cent as from 1 January 1996 and is being further reduced to 0.05 per cent by 1 January 1999.

For currently used motor-cars and motorcycles, annual mandatory inspection and maintenance programs have recently been introduced. The Department of Land Transport is initially enforcing these programs on in-use motor-cars and vehicles registered in the Bangkok metropolitan area. Motor-cars over 10 years old and motorcycles over 7 years old now have to obtain test certificates before extending their annual registration.

The government requires oil depots, oil trucks, and petroleum service stations in the Bangkok metropolis and major urban cities to install an oil vapor recovery system. Existing service stations need to complete the installation of the system by 1 January 2000.

Another main source of air pollution is sulfur dioxide (SO2) from lignite-fired power plants. Following incidents of atmospheric inversion in October 1992 at Mae Moh district, Lampang province, the site of a 2,025 MW lignite-fired power plant, the Royal Thai Government immediately reduced electricity production for the short term. The government ordered EGAT to install flue gas desulfurization units (FGD) in all new lignite-fired power plants to minimize emissions and to retrofit eight existing units with FGDs, which use the Wet Limestone Process and can effectively reduce SO2 emission by about 95 per cent. The FGD installation of all units is expected to be completed in early 1999.

Areas in Bangkok and Samut Prakhan province are also effected. To address this, the Cabinet is enforcing the sale of low-sulfur fuel oil in these areas. Also the government is requiring PTT to accelerate the planned procurement of natural gas for EGAT's power plants, ensuring the plants comply with the Pollution Control Department's emission standards.

 

 

 

National Energy Policy Office
File updated 31 Oct 1997