(Adds estimate of reserves in disputed area in fourth paragraph, Cambodia comment in seventh paragraph.)
Oct. 12 (Bloomberg) -- Thailand’s petrochemical industry may lose billions of dollars if the government fails to strike an agreement with neighboring Cambodia on overlapping claims in the Gulf of Thailand, Energy Minister Pichai Naripthaphan said.
“Thailand is running out of gas in 15 years,” he said in an interview in Bangkok today. “Petrochemical companies rely on components of wet gas from the Gulf of Thailand. Billions of dollars every year will be gone if we can’t get more supply.”
Thai Prime Minister Yingluck Shinawatra’s two-month-old government has sought to mend ties with Cambodia after gun battles in disputed border areas killed more than 20 people since 2008. Waters claimed by both countries contain enough gas to secure Thailand’s supply for 50 years, Pichai said.
Development in the 26,000 square kilometers, more than twice the size of Qatar, has stalled for more than three decades. Pichai said the “huge” gas reserves in the disputed zone may at least be equal to the country’s current reserves, which BP Plc estimates at 11 trillion cubic feet, about a 10th of China’s gas reserves.
It will take at least 10 years to pump gas out of the ground after a political agreement is reached, a process that is now under way, said Pichai, 49.
“At this moment it looks very positive,” he said. “We want to get it done and Cambodia wants to get it done. We just need to make sure internal politics won’t be an obstacle.”
Cambodian Deputy Prime Minister Sok An, who is also chairman of the Cambodian National Petroleum Authority, said Oct. 12 that negotiations would begin when both governments are ready.
“Cambodia is determined to amicably resolve the dispute,” he said, according to a transcript of his remarks. “A resolution would enable the economic benefits that might arise from oil and gas production in the area to be fairly allocated between the two countries.”
In 2008, the last time ex-Thai leader Thaksin Shinawatra’s allies were in power, protesters accused the government of ceding sovereignty to Cambodia. Former Prime Minister Abhisit Vejjajiva, now opposition leader, threatened to revoke an agreement to demarcate the waters in 2009 after Cambodia named Thaksin as an adviser.
Thailand’s petrochemical industry, based on the gulf coast about 200 kilometers from Bangkok, has attracted investment from Dow Chemical Co., Mitsubishi Chemical Holdings Corp. and Siam Cement Pcl. Thailand accounted for almost half of Southeast Asia’s production of polyolefins, polymers used in making plastic parts in appliances and automobiles.
Thailand will seek to renegotiate concessions in the overlapping area awarded in the 1970s to companies such as Chevron Corp. and Idemitsu Kosan Co. to ensure that state-run PTT Pcl has a stake, Pichai said. In 1997, Cambodia awarded concessions to BHP Billiton Ltd., ConocoPhillips and Royal Dutch Shell Plc.
“As a partner of both Thailand and Cambodia, we encourage the two countries to resolve their differences so the OCA can be developed for the benefit of both countries,” Gareth Johnstone, a Singapore-based spokesman for Chevron, said today in an e-mail response to questions, referring to the disputed area.
Natural gas fuels 72 percent of power generation in Thailand, up from 62 percent in 2000 and 40 percent in 1990, according to Energy Ministry statistics. Gas imports from Myanmar, which started in 2000, accounted for 20 percent of Thailand’s consumption last year, statistics show.
Gas piped from the Gulf of Thailand costs about $6 per million British thermal units, compared with $18 for liquefied natural gas, Pichai said. Thailand would be forced to import more LNG if it can’t develop the disputed area, he said.
“People who don’t like Cambodia much may start to like Cambodia more if they know that they’ll have to pay double for electricity,” Pichai said.
Pichai plans a trip to Myanmar later this month in an attempt to secure more gas in the face of “aggressive” competition from China. That gas is used primarily for power plants, he said.
“The gas in the overlapping claims area may be more vital because it has the petrochemical component that may create more value added,” Pichai said. “Just bring it up and the value will be there.”
--Editors: Tony Jordan, Patrick Harrington
To contact the reporters on this story: Daniel Ten Kate in Bangkok at email@example.com; Supunnabul Suwannakij in Bangkok at firstname.lastname@example.org
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