Saharath Boonpotipukdee, deputy governor for corporate social affairs at Egat, said yesterday that the state-owned power utility had finished the study. It found that it could meet the government’s objectives to help lower electricity costs and introduce competition in the import of liquefied natural gas (LNG).

“One good aspect is that [Egat] can buy gas itself and the electricity tariff will be lowered, while also supporting the government’s policy to create competition and choices in the importing of LNG,” he said.

The NEPC meeting on May 30 resolved for Egat to proceed with its study on the FSRU project that will result in the break-up of PTT’s monopoly on LNG import and distribution.

The Energy Ministry has forecast LNG demand to rise from 5 million tonnes this year to 22 million tonnes per year by 2036, because of depleting domestic gas supplies.

At the Energy Symposium held by the Federation of Thai Industries, Saharath said the government did not want Egat to use the FSRU to supply gas only to its own power plants, but also to integrate its planned gas-pipeline system with PTT’s pipeline network.

To cope with the extra demand on the FSRU, the government assigned it to increase the FSRU’s capacity from 3 million tonnes to 5 million tonnes annually.

The government has already introduced third-party access, which lets other firms use PTT’s pipeline for supplying gas to end-users.

The study found the FSRU project could help bring down electricity costs, since Egat could bypassPTT to procure gas itself.

Saharath declined to disclose the investment budget for the 5-million-tonne FSRU, which would be floated off the coast in the Gulf of Thailand.

Egat earlier estimated a Bt30-billion budget for a 3-million-tonne FSRU.

The study suggests three locations for the FSRU, including one that is 20 kilometres offshore from the South Bangkok Power Plant in Samut Prakan, and another off the coast of Sri Racha.

He did not dismiss the chances of the private sector taking part in the FSRU project, but a joint venture would have to go through the public-private partnership process that usually takes at least one year.

The FSRU will supply gas to Egat’s South Bangkok Power Plant (Blocks 1-2) and North Bangkok Power Plant, as well as to PTT’s gas-pipeline grid.

The study covers tariff structures for the whole supply chain of natural gas, from transmission and liquefied-natural-gas (LNG) terminals to wholesale and retailing. It is the first major review since 2007.

Panyawat Gomutbutra, director of the Energy Engineering Institute at Kasetsart University and the leader of the consultancy team, told The Nation that the net impact to PTT, the sole operator of transmission, wholesale, and LNG terminal businesses, from the proposed tariff formulas would be roughly negligible. For the transmission and LNG tariff formulas, a major change is the proposal for input values to be reset every five years, instead of the current ones that are established only once in the entire life span of gas pipelines.

For the wholesale tariff, the proposed formula follows a National Energy Policy Council (NEPC) resolution in February 2011 for PTT to separate gas prices into two parts – the costs and the risks associated with the guarantee of the quality and security of gas supplies and other areas.

Panyawat said the new formula could result in a narrowing of the gap between the prices of gas thatPTT distributes to the Electricity Generating Authority of Thailand and independent power producers and prices for small power producers. For the retail tariff, the proposed formula is a shift from the current one that is pegged to fuel oil prices to one that is formulated on a cost-plus basis, which would allow gas retailers to pass wholesale gas prices on to consumers.

ERC spokesman Viraphol Jirapraditkul said the proposals would go through a public hearing and discussions with parties involved before being presented to the NEPC for approval around the end of this year and it would become effective early next year. The retail tariff proposal would help address the complaints of gas retailers who were suffering losses from the prolonged slump in oil prices as the current formula was pegged to fuel oil prices.Hundreds of factories that use natural gas would be affected by the proposed change.

Tienchai Chongpeerapieng, president of Bera Business and Economic Research Associates, said the proposed formulas were good since they would help tackle problems associated with the old formulas, which did not work well in the current environment where fuel prices had become much more volatile.

“The positive side of the shifting to the cost-based [formula] is that gas prices would become more stable and it would protect the margins of gas operators in every step. There would be a guarantee of no losses,” Tienchai said.

“The negative side is that the (gas) traders would shoulder no risk at all. All risks would be passed onto the consumers,” he said.

“At the current oil price of US$40 a barrel, it’s already hard [to find investors], if there will be people investing under this [production] volume,” he said.

The government has resolved to put up for bids the Erawan gas field, whose concession is held by Chevron Thailand Exploration and Production, and Bongkot, held by PTT Exploration and Production (PTTEP).

Their concessions will expire over 2022-23.

According to the department, the Erawan and Bongkot gas fields had combined P1 and P2 reserves of 3 trillion cubic feet (tcf) as of the end of last year. P1 or proven reserves are defined by a 90-per-cent rate of discovery and P2 or probable reserves by 50 per cent.

Veerasak told a press conference that based on the current production rate of 2,100 million cubic feet (mcf) per day, these reserves would be depleted before the concessions end if there is no new discovery.

If the estimated amount of contingent resources is included, whose actual production rate depends on economics and technical capability, reserves will reach 5.71tcf.

Chevron and PTTEP have recently begun negotiating with PTT for a revision of their gas-supply contracts concerning both volume and pricing for the remaining years of their concessions, since they were uncertain if they would win the upcoming auction to return as operators in those fields.

The pricing terms have to be approved by the Petroleum Committee, chaired by the permanent secretary of the Energy Ministry.

The department plans to hold talks with Chevron and PTTEP on their gas production and investment plans with the objective of having them continue their investments prior to the end of their concessions, to minimise the reduction in gas supplies during the transition.

The department is discussing with the Excise Department relaxation of some regulations regarding the deduction of petroleum-exploration expenses for the two companies.

It is also negotiating with Chevron and PTTEP to disclose the database of information on their petroleum fields, which is needed for potential investors to appraise and prepare their quotes in the upcoming tender.

The government plans to issue bidding invitations next March with the goal to select the winners by September.

However, if there are major amendments to the two petroleum bills under consideration by the National Legislative Assembly, such as to include the setting up of a “National Oil Company”, the auction time frame might not be met and there could be some negative impacts on the continuity of domestic gas supplies by the existing producers.

To prepare for the auction, energy officials are drafting the terms of reference, five ministerial regulations and one ministerial announcement.

To stretch the remaining life span of the fields to at least 10 years, officials may write in the ToR that the winning bidders can produce 1,500mcf of gas per day, which is lower than the current 2,100mcf rate.

However, it is considering increasing the production rate in the draft ToR to make it more attractive to bidders, Veerasak said.

“The question is not what energy is the best, but the question is which balance we should have,” said Agnate Rising, director-general of the World Nuclear Association.

The experts acknowledged that the world must be committed to the COP21 goal to avoid dangerous climate change by limiting global warming to well below 2 degrees Celsius. Renewables are being explored in a big way to reduce emissions. However, they say, renewable energy cannot be totally depended on given its drawbacks in reliability.

Renewables

According to a UN-backed report released in March, renewables have unique advantages. Wind farms can be built in nine months or so, solar parks in three-to-six months, whereas coal and gas plants take several years, and nuclear even longer. That explains why developing countries in a hurry for new capacity may opt for speed.

In 2015, a total of US$266 billion (Bt9.4 trillion) was invested in new renewable power-generating capacity globally, excluding large hydro (with 50 megawatts or more in capacity), driven mainly by China and India.

In the year, the developing world invested $156 billion, some 19 per cent up on 2014 and a remarkable 17 times the equivalent figure for 2004, of $9 billion. Developed countries invested $130 billion in 2015, down 8 per cent and their lowest tally since 2009.

Renewables accounted for 10.3 per cent of global electricity generation last year, meaning that they prevented the emission of 1.5 gigatonnes of CO2 equivalent.

More investment is expected in the years ahead as countries like China, India, Japan and Germany increase the share of renewables in their energy mix. Russia, the producer of oil, gas and nuclear technology, also plans to raise the share from 1-1.5 per cent to 4 per cent in 2020.

Encouraging this is also a decrease in investment costs. Capital costs for photovoltaic projects [converting solar energy into direct current electricity] in India have fallen to among the cheapest in the world, at around $1.1 million per megawatts last year.

At the Atomexpo, V F Vekselberg, president of Skolkovo Fund, however noted renewables were still costly, aside from their low efficiency. While the investment cost of renewables has been cut twofold in five years, it remains expensive. Meanwhile, though their efficiency can be increased, investors need to take into account the lifecycle of the projects when estimating the cost.

There are calls for optimisation of power balance, taking into account the environmental and economic aspects, as well as atomic and renewable power engineering.

Nuclear energy

The share of renewables in China’s energy mix is projected to reach 30 per cent by 2030 compared to 13 per cent in 2010. Yet, China is also expanding nuclear capacity.

Last year, China installed a world record 32.5 gigawatts (GW) of wind power and a world record 18.3 GW of solar power. Coal consumption fell 3.7 per cent but nuclear power grew 30 per cent and natural gas 3.3 per cent.

As of 2015, China’s 28 nuclear reactors in operation have an installed capacity of about 25.5GW. China is planning to have at least 110 nuclear reactors running by 2030, to increase nuclear power share in the energy mix from 2 per cent to 10 per cent.

Other countries are expected to follow suit.

Representatives of various nations were at the expo to share reasons why their countries embrace nuclear energy.

Ali Zurkarneyn, chairman of Bangladesh’s Atomic Energy Commission, said in a quest to increase power and obtain the right energy mix, nuclear power would contribute 10 per cent of the country’s energy mix in 2030, while the rest would come from natural gas and coal.

Ahmad Hiyasat, general director of the Jordan Company for Atomic Energy, said nuclear power was in the picture as the country had to import 90 per cent of its energy. While 500MW of power would come from renewables this year with additional 500MW next year, gas-fired and nuclear power plants would ensure a right energy mix and also reduce energy imports. In Jordan, students are now studying nuclear degrees in Jordan and Russia, while the country prepares the legal and regulatory framework ahead for the erection of a nuclear power plant.

Franklin Osaisai, general director of Nigeria’s Atomic Energy Commission, said that 2025 was the hopeful deadline for the first nuclear power plant in his country. It was highlighted as part of Nigeria’s striving to boost carbon-free energy to 50 per cent of consumption.

According to representatives from Belarus, the country relies heavily on natural gas in electricity generation and a large portion is imported. It thus needs to diversify energy sources, and nuclear power is a cheap choice.

A nuclear power plant is being constructed with the first generating unit expected to be commissioned in 2018 and the second in 2020. The representative said preparation was thorough as safety was the core demand of nuclear power plants.

A committee was set up in 2007 under the supervision of the deputy prime minister. This committee supervised progress in 19 safety areas and reviewed the progress every month. Training programmes have been launched and the system of state control of supply and services established. The representative also highlighted full cooperation with the International Atomic Energy Agency and other governments to ensure full compliance with safety standards.

“No matter how experienced the operators are and no matter how reliable the design is, humans play a key role,” he said.

The World Nuclear Association targets global nuclear energy to increase to 25 per cent of electricity generation, from 11 per cent in 2014. That requires new capacity of about 1,000 GWh per year from below 400 GWh in 2014.

Low access to electricity and demand for clean and reliable energy will be the key drivers of growth, said World Nuclear Association director-general Rising.

 

The details are as follows:

Yadana, Myanmar: February 20-23, leading to the missing of about 1,100 million cubic feet per day (mcfpd).

Zawtika, Myanmar: 10 days in March, leading to the missing of about 640 mcfpd.

Yetagun, Myanmar: 10 days in April, leading to the missing of about 570 mcfpd.

JDA-A18: during July and August, leading to the missing of about 420 mcfpd.

Noppadol Pinsupa, senior executive vice president of PTT, assured that the maintenance shutdown would not affect demand, through preparation with the energy regulator, gas suppliers and industrial users.

He said PTT has tried to schedule the maintenance for the dates when demand is low.

“PTT is studying and developing the energy network to reduce the risks from missing supply, to meet our mission in maintaining energy security,” he said.