Petroleum Concession in Thailand (Newsletter March 2016 Part 1)

Newsletter Juslaws & Consult (J&C) – March 2016 Part 1: Petroleum Concessions in Thailand

Thailand is opening its 21th bidding round for oil and gas exploration concessions by the middle of 2016. The current concessions will expire around 2021. The next bidding round has been delayed due to intervention from NGOs, in particular environmental activists.

The oil and gas concessions in Thailand are particularly interesting for petroleum companies asthe Thai government is participating in the profits from oil and gas exploration at a rate of totaling roughly 67% which is less than in the neighboring countries, where the government share on average equals 74%. In the case of Thailand the government share consist of sliding scale royalty based on production, a specified (50 percent) petroleum income tax applied to profits, and a special-benefit windfall profit tax. On the other hand the average discovery size in Thailand is small compared to other countries in Southeast Asia (7 million barrel of oil equivalent). In the new bidding round Thailand will offer 29 petroleum blocks – comprising 23 onshore blocks and six offshore blocks in the Gulf of Thailand – stretching over 66,463 square kilometers. One can expect a discovery of 1 to 5 trillion cubic feet of gas and 20 to 25 million barrels of crude oil.

In Thailand today the oil and gas exploration is dominated by U.S. companies besidesthe Thai PTT. The two big player in the industry in Thailand are at the moment Chevron and PTT. PTT emerged from the former state-owned Petroleum Authority of Thailand, back then under the control of the Ministry of Industry. After privatization PTT became PTT Public Company Limited, a huge holding company with several affiliate companies. Oil refinement is currently conducted by by Bangchak Petroleum Public Co., Ltd., Star Petroleum Refining Co., Ltd., Thai Oil Public Co., Ltd., and PTT Aromatics and Refining Public Co., Ltd. PTT is a significantshareholder in most of Thailand’s oil refining companies.The new biding round was preceded by substantial legislative changes of the regulatory framework governing the oil and gas license system. Environmentalists had urged a conversion from the existing concession system to production sharing contracts. The new legislation instead provides a choice for the petroleum companies between these two systems. If you would like to find out more about the different types of license agreementsforthe oil and gas industry, please contact us.

Part 2: GTCC Membership

Part 3: Boi Seminar

Part 4:Thailand Japan Young Entrepreneurs Networking

Part 5: PPP and Civil Construction Projects in Thailand

Part 6: 2016 Acquisition of Hotels & Resorts in Thailand and Due Diligence Report

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