Page 5 - AsiaElec week 23

AsiaElec COMMENTARY AsiaElec
Thai power producer awards first LNG supply contract
EGAT has picked Petronas LNG to supply up to 1.5 million tonnes per year of LNG
THAILAND
WHAT:
The award was delayed in May, owing to state concerns over take-or- pay clauses
WHY:
Bangkok is worried that EGAT and PTT sharing a single import terminal may cause issues
WHAT NEXT:
The government
has ordered the two companies to co-operate more closely
STATE-RUN Electricity Generating Authority of ailand (EGAT) awarded its rst LNG sup- ply contract last week, signalling an end to state- owned PTT’s stranglehold over the local natural gas market.
EGAT picked Malaysia’s state-owned Pet- ronas LNG over 11 other bidders, including Qatargas, Royal Dutch Shell, Chevron, Total and Japan’s Marubeni.
ailand’s largest power producer opened bidding for the 800,000 tonne to 1.5 million tonne per year contract in April. e move is a signi cant shi in the dynamics of the ai gas market, given that EGAT has relied solely on PTT for its gas supplies until now.
Supply deal
EGAT has been looking to broaden its supply portfolio for some time, given the domestic power sector’s heavy dependence on gas as a feedstock.
A spokesman told Reuters last week that EGAT was still negotiating with Petronas over contract terms, including the price. e news- wire quoted an unnamed source as saying that the proposed price was in line with the wider market at 11-12% of Brent crude oil prices.
EGAT governor Viboon Rerksirathai has said previously that his company intended to sign an eight-year contract with the winning bidder by
June and that the rst shipment would arrive at the Map Ta Phut terminal in September. Finalis- ing a deal may not be so simple, however.
e ai government must sign o on the nal agreement and has expressed concern over the risks associated with take-or-pay clauses.
“ e government has raised the issue of take- or-pay and has questioned EGAT what it can do if it cannot take the contracted volumes,” Reuters quoted an unnamed source as saying.
e issue arises from EGAT’s plans to bring in the LNG via state PPT’s existing 11.5 million tonne per year Map Ta Phut receiving terminal in the east of the country, with Bangkok worry- ing that it might clash with PTT’s import plans.
EGAT originally announced that it had picked Petronas LNG as the winner of the supply tender on May 10. However, the Energy Policy Administration Committee (EPAC) suspended EGAT’s plans, citing Energy Policy and Planning O ce (EPPO) concerns that demand might not absorb the proposed imports.
First time around
e EPPO noted at the time that should EGAT struggle to nd a buyer for the fuel then it would be hit by the supply contract’s take-or-pay clause. ai Energy Minister Siri Jirapongphan added that EGAT’s selection process was ne, that Pet- ronas LNG had indeed o ered the lowest price
Week 23 13•June•2019 w w w . N E W S B A S E . c o m P5