Department of Mineral Fuels (DMF) Gas Business in Thailand

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1 Department of Mineral Fuels (DMF) Gas Business in Thailand Sunton Srigulwong Tananchai Mahattanachai For More Information: Cambodia, August 29, 2005

2 Outlines Gas Market & Gas Transportation Contract Volume Pricing Mechanism Roles of Government, Incentives, Subsidies and Taxes

3 Gas Market & Gas Transportation

4 Natural Gas Consumption Total Gas 2,796 MMSCFD GSP (Feed Stock) 13% Industrials 10% EGAT 36% SPP 15% IPP 26% Indigenous Gas 2,090 MMSCFD (75%) Imported Gas 706 MMSCFD (25%) EGAT IPP SPP Industrials GSP (Feed Stock)

5 Natural Gas Utilities in Thailand Imported gas from Myanmar Natural gas Natural gas from the Gulf of Thailand GSP 1-5 & DEW POINT CONTROL UNIT C 1 C 2, C 3 Fuel for power generation Fuel for industries Natural gas for vehicles (NGV) Petrochemical feedstocks (NPC/TOC) C 1 Methane C 2 Ethane C 3 Propane C 3 +C 4 LPG C + 5 NGL CO 2 CO 2 C 3 +C 4 C + 5 C + 5 LPG as cooking, transportation, industrial fuel and petrochemical feedstock NGL refined to produce gasoline and as fuel for industries, and petrochemical feedstocks Petrochemical feedstocks (TOC) CO 2 CO2 as raw material for food preservation

6 BURMA THAILAND NAMPONG Offshore Pipeline Capacity East 3,800 MMCFD 1 st : 840 MMCF 2 nd : 1,100 MMCF 3 rd : 1,860 MMCF West 1,300 MMCFD NE 200 MMCFD JDA 1,020 MMCFD EXISTING PIPELINE MASTER PLAN 3 PIPELINE POWER PLANT NATURAL GAS FIELDS ON GOING PIPELINE YADANA YETAGUN 36, 350 KM 20, 210 KM BAAN ITONG TALUANG WANGNOI SBK RATCHBURI (RB) THABSAKAE 5 GSP Cap MMSCFD 3 rd SONGKHLA Gas Pipeline Network KANGKOI NBK BANGPAKONG ESB MABKHA RAYONG 2 nd 1 st MALAYSIA Cambodia BENJAMAS TANTAWAN PLATONG KHANOM ERP ERP2 ECP KRABI ARTHIT PAILIN BONGKOT JDA NATUNA

7 Structure of Gas Market producers Gas Sale Agreements between PTT & other producers customers Unocal + Moeco EGAT IPP PTTEP + Total PTT SPP EGCO Chevron Others for example import from Burma Gas Pipeline Gas Separation Plant Industries Gas Supply Agreements

8 Contract Volume

9 DCQ from the Gulf of Thailand Unit: mmcfd Chevron 230 L-STRUCTURE Unocal I 230 Chevron Unocal II, III 510 NANG NUAN (P) SURAT (P) PLADANG PAKARANG DARA ERAWAN (P) BAANPOT (P) PAILIN SONGKHLA BUA BAN SONGKHLA UBON TANTAWAN KAPHONG (P) PLATONG (P) TRAT SATUN (P) JAKRAWAN (P) FUNAN (P) GOMIN MORAKOT BONGKOT (P) JDA Pailin 353 Bongkot 550 Arthit 330 MTJA A MTJA B-17 August 2005

10 DCQ Onshore Thailand Unit: mmcfd SAN SAI (P) MAE SOON (P) CHAI PRAKARN PONG NOK (P) CHIANG MAI LAOS PTTEP Siam 50 NONG TUM THAP RAT (P) SIRIKIT WEST (P) Bung BUNG YA Ya (P) U-Thong Sirikit BUNG MUANG (P) Wichien Buri PRATU TAO (P) WAT TAEN PRU KRATHIAM (P) SIRIKIT (P) T H A I L A N D U-THONG (P) KAMPHAENG SAEN (P) WICHIAN BURI SRI THEP PHU HORM Nam Phong DONG MUN NAM PHONG (P) NAKHON RATCHASIMA EXXON Mobile 33 Phuhorm 108 Kamphaeng Aug. 2005

11 20-Years Thailand Gas Supply by Sources 7, BTU/scf) MMCF/D 6,000 5,000 4,000 3,000 Demand Growth 3% pa. Additional Gas from Gulf Imported Gas 2,000 1, ? Domestic/LNG/Pipe Gas Domestic Gas Sources: EGAT/PTT/DMF

12 Pricing Mechanism

13 Gas Contract in Thailand Long Term Contract - Gas Volume - Price & Payment - Quality - etc. -Duration Initial Base Price (P) & Price Adjustment Formula Cost plus Energy Parity Comparable Fuel Inflation Indices Exchange Rate

14 Roles of Government, Incentives, Subsidies and Taxes

15 Vision & Mission Statements Our Vision To be a core agency in administering, securing and managing mineral fuels fields so as to establish and maintain the energy security of the country with great efficiency and sustainability. Our Mission To promote integral activities of exploration, development and production of mineral fuels using advanced and clean technology of international standards.

16 Role of DMF in Oil & Gas Business Invitation for bidding Production & Sales Award Concession Development Phase Exploration Phase Award Production Area

17 Concessionaires has right to import of foreign skilled workers or specialists, including their spouses and dependent children for the propose of petroleum operations - Tax Deduction Incentives for E&P Business Supportable Petroleum Act => Increasing of Petroleum Activity in Thailand Flexible and Attractive Fiscal Regime - No Signature Bonus - Remark on Marginal Field Development/Synergy/Utilization => Thai i IV Concessionaires and those contractors has right to bring into Thailand machinery, equipment, tools, structures, accessories, and other materials which are to be used in the petroleum operations free of import duty and VAT upon the Committee s approval. - Sliding Scale Royalty => 5.00% (0-60,000 bl/month) - 15% (>600,000 bl/month) - K-factor Progressive Policy - Availability of Gas Infrastructure => Gas Network and Pipeline - Back-up supply from domestic gas - Own terminal capacity - Eminent status in energy business - Creditability - Stability of Political Policy - Location

18 Thank You

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