Thailand’s eyes USD 300bn gas opportunity with Cambodia
Reading Time: 4 minutesThai electricity authorities will increase renewables in the energy mix in the national grid while securing new domestic energy sources, reducing reliance on imports and bolstering energy independence, according to the Thailand government’s strategic policy for 2025.
The three key electricity authorities – the Electricity Generating Authority of Thailand (EGAT), the Metropolitan Electricity Authority (MEA), and the Provincial Electricity Authority (PEA) – are preparing to invest in infrastructure to accommodate the growing share of renewable energy, website Solarquarter reports.
Thailand is pursuing new domestic energy source initiatives to align with global trends towards sustainable energy. The policy for 2025 reflects a comprehensive approach to sustainable development, balancing the promotion of clean energy with the need for domestic energy security.
The planned investments and collaborative efforts among government agencies and industry stakeholders aim to position Thailand as a leader in renewable energy adoption in the region.
Electricity authorities to invest
The EGAT, MEA and PEA investments have been deemed integral for the project of incorporating renewable sources in the national grid to ensure a stable energy supply.
Thai Energy Minister Prasert Sinsukprasert delivered a keynote speech on “Policies and Directions for Thailand’s Energy Sector,” highlighting the government’s strategic vision and collaborations between public and private sectors in achieving energy goals. The IEEE Power & Energy Society (Thailand) recently hosted the IEEE PES Dinner Talk 2024 in Bangkok.
A panel discussion titled “The New Electric and Energy Systems: Reinvention and Resilience” featured key industry leaders, including Thepparat Theppitak, Governor of EGAT; Wilas Chaloeysat, Governor of MEA; and Supachai Ek-un, Governor of PEA.
The discussion emphasized the need for innovation and resilience in developing new electric and energy systems to meet future challenges.
Thailand and Cambodia are considering a joint exploration of gas reserves worth some USD 300bn in the disputed Gulf of Thailand, which could extend the lifeline Thai gas supplies by up to two decades. The reserves are estimated to contain some 10tn cubic feet of natural gas and around 300mn barrels of crude oil, over the 26,000 sq km offshore area.
As discussions continue, energy security and economic feasibility will remain key factors in determining the outcome of negotiations.
Economic realism meets national sentiment
While the possible financial and strategic benefits are considerable, Thai Prime Minister Praetongtarn Shinawatra’s government must balance these with inherent political risks around sovereignty.
Nationalist sensitivities complicate the situation, however, and the premier’s efforts highlight the urgency to cut fuel import costs amid rising energy prices and declining domestic gas supplies.
Thai Finance Minister Pichai Chunhavajira said the countries should be pragmatic regarding cooperation and put sovereignty issues aside for now, given the pressing need for energy security to support Thailand as a regional auto and tourism hub.
Thai company PTT Exploration and Production Public Company Limited has had interests in the region since the 1970s, as have US firm Chevron and the UK’s Shell, and successful talks would likely open doors for them.
According to the Thai civil-military opposition party Palang Pracharath Party (PPRP), linked to the National Council for Peace and Order military junta that ruled Thailand from 2014-19, negotiating under the 2001 memorandum could threaten national sovereignty.
The PPRP is particularly concerned about nearby Ko Kut, a nationalist rallying point, although Cambodian Prime Minister Hun Manet has said the island’s sovereignty will not be on the agenda. Ex-senator Somchai Swangkarn said Thailand should resolve the claims before exploration to avoid a public backlash.
For its part, Thailand says its joint development agreement with Malaysia from 1979 could serve as a model for resource-sharing that upholds borders, and the joint exploration could set a precedent for managing national interests within a regional framework of economic pragmatism.
In conclusion, while the talks offer a potential solution to Thailand’s energy concerns, they also underscore the fine line Paetongtarn’s administration must tread between economic necessity and national sentiment.
New political will, but key issues unresolved
Negotiations over the Overlapping Claims Area (OCA) in the Gulf of Thailand, part of the South China Sea, date back to 1969, with Cambodia delineating its claim in 1972 and Thailand counterclaiming in 1973. The area’s southern boundary follows the Cambodia-Vietnam maritime border drawn up in 1991.
Despite renewed political will, key issues remain unresolved, including the demarcation of overlapping areas and revenue-sharing arrangements. Most of the gas reserves are believed to be closer to Thailand’s border. At the same time, the Cambodian side of the area will likely face more challenging drilling and extraction issues, giving Thailand the upper hand in negotiations.
Thailand has proposed dividing the area into three parallel zones running north to south. According to past proposals, revenue from the central zone would be split equally, and the outer zones would be weighted 80/20 in favour of the nearer country.
Even under a 50/50 revenue-sharing model, Thailand would remain the primary beneficiary due to its more advanced oil and gas industry, compared to Cambodia’s dearth of refining capacity.
Thailand operates 34 petroleum exploration and production projects across 47 fields in the Gulf of Thailand, with petroleum production equating to around 558,000 barrels a day. This includes 2.4 bcf of gas per day, 75,000 barrels per day (bpd) of condensate, and 70,000 bpd of crude oil, official sources said.
Declining domestic production has led Thailand to import 72% of its gas needs, primarily from Malaysia, Myanmar and Qatar. In 2023, Thailand imported 1.55mn mt of LNG, up 40% year-on-year, S&P reported.
Thailand and Cambodia have both set net-zero targets for 2050, but Thailand’s gas reliance remains. Just 5.25% of Thai electricity comes from renewable sources, compared to Cambodia’s 2021 energy mix of hydropower (41%), coal (41%), fuel oil (8%) and solar (6%). Despite holding six offshore oil and gas blocks, Cambodia does not currently produce fossil fuels.