For the past decade, Thailand has been a rapidly developing country, with rapidly growing energy consumption.


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GENERAL BACKGROUND
After nearly a decade of strong economic growth and expansion, Thailand is currently in the midst of an economic crisis. It began in early July 1997 after the Thai government floated its currency, resulting in an immediate decline in its value. The depreciation of the Thai baht helped push the Thai economy into a severe recession which quickly spread to other nations of Southeast Asia. On January 12, 1998, the baht hit a record low of Bt 56.45/US dollar, and from July 1997 to February 1998 it lost more than 50% of its value against the US dollar. The baht is currently traded at Bt 37.8/US dollar. Thailand's real gross domestic product (GDP) growth rate for 1997 was -0.5%, down from 6.0% in 1996 and 8.7% in 1995. Negative growth is projected to continue in 1998 at -3.5% before rebounding in 1999 to 1.5%. In addition, inflation is expected rise sharply from 5.6% in 1997 to an estimated 12.5% in 1998.

Following the fall in the baht, the Thai government looked abroad for financial assistance and enacted reforms to prevent a similar situation in the future. In August 1997, the International Monetary Fund (IMF) granted Thailand a $17.2 billion package designed to help the country institute economic reforms and get the economy back on track. In December 1997, Thailand received an additional $350 million from the Asian Development Bank. These additional funds will be used to strengthen the laws, regulation and supervision of Thailand's Securities and Exchange Commission. In January 1998, the Thai government approved a plan that attempts to minimize the chances of exporters holding onto their foreign currencies for speculative purposes. It is designed to bring the funds into the Thai banking system quicker. The plan reduces the period for possession of foreign currencies by exporters from 15 days to seven days.

Privatization
With encouragement from the IMF, the Thai government has stepped up its efforts to privatize state-run Petroleum Authority of Thailand (PTT) placing the plans for privatization on the "fast track." The government is considering two methods for the privatization of PTT. The first would transform PTT into a holding company and list it on the Stock Exchange of Thailand (SET). This would enable investors to invest in all of PTT businesses and subsidiaries. Over time, the holding company would gradually sell off its holdings in the subsidiaries. In the second method, PTT would separate its subsidiaries and allow them to independently seek listings on the SET. Under this method, investors would have the opportunity to invest in only those businesses that they saw as profitable. The government aims to raise up to $14 billion through the privatization process over the next three years. The money will help ease budgetary pressures as the country tries to rebound from its current economic situation. The government hopes to have a privatization plan in place by the fourth quarter of 1998.

OIL
Thailand contains nearly 300 million barrels of proven oil reserves. In 1997, Thailand produced about 107,000 bbl/d of oil, of which 71,000 bbl/d was crude. The country's crude production has been on the rise since 1995, increasing 10,000 bbl/d in each of the past two years. Approximately 70% of Thailand's total petroleum demand is imported and more than 70% of its crude oil imports come from the Persian Gulf. In 199, Thailand consumed more than 700,000 bbl/d.

For 1997, the cost of Thai oil imports increased by 18.3%, to 180.88 billion baht, on a 1.2% rise in import volume. The rising costs of imports, coupled with the continuing financial/economic crisis, has sent PTT looking for barter opportunities with other countries in the region. Surong Bulakul, PTT International's senior vice president for international supply and trading, indicated in January 1998 that PTT was looking to obtain agreements with Indonesia, Malaysia, South Korea, and Iraq to defray the growing costs of oil imports. Surong said PTT may trade Thai products such as rice, sugar, corn, garments, and petrochemical products for crude oil and other oil products. However, no deals have been struck as of this time.

In September 1997, the Thai government decided to end the subsidy for liquefied petroleum gas (LPG), used primarily for household cooking. The depreciation of the baht has increased prices of LPG, thereby depleting a fund created to sustain the subsidy rapidly. Termination of the subsidy will translate into a 3.5 baht/kg rise in the domestic LPG price.

Despite its moderately sized oil industry and small reserve base, Thailand continues to award exploration concessions to increase domestic oil production. In September 1997, a consortium consisting of US-based Kerr-McGee and Amerada Hess Exploration along with PTT Exploration and Production International (PTTEP) won a concession to survey petroleum block W7/38 located in the Andaman Sea on Thailand's west coast. The concession is a three year exploration deal with an option for two 3-year renewals. If exploration is successful, the consortium may sign a 20-year concession for drilling and production rights, with an option for an additional 20 years. Block W7/38 is located 110 yards off the coast of Phuket Island.

In December 1997, Thai Shell Exploration and Production announced that it was negotiating with PTTEP for a joint venture to explore Blocks 14, 15 and 16, located in an area bordering Thailand and Vietnam. Thai Shell offered PTTEP advanced technical methods and machinery for petroleum exploration and production. However, as part of a consolidation plan, the Royal Dutch/Shell group decided in March 1998 to close its oil exploration and production operations in Thailand. Shell is currently looking to sell its interests in Thailand including the Sirikit oil field, the main source of Thailand's domestic crude production. Sirikit is currently producing around 20,000 bbl/d. The field is located in the S-1 concession and according to Shell, S-1 has remaining reserves of more than 100 million barrels. The Sirikit field also produces 64 Mmcf/d of gas.

Refining/Downstream
Thailand has five oil refineries, with a combined capacity of 704,250 bbl/d. The three main refineries are Thai Oil Co. Ltd., located in Sriracha (207,000 bbl/d), Esso Standard Thailand Ltd. (167,000 bbl/d), also located in Sriracha, and Shell Co. Of Thailand Ltd. (145,000 bbl/d) in Rayong.

Thailand's economic difficulties have had a significant impact on its refining sector. Refineries have been running at capacity throughout the crisis despite falling domestic demand for oil products. With storage tanks filled to capacity, refiners opted to begin exporting surplus production in an attempt to minimize losses. However, the exports have not offset lost profits from declining refiner margins, higher operating costs, and lower domestic demand. For the first nine months of 1997, Thai Oil, the country's largest refiner, reported that pre-tax profits fell to $2.2 million from $22 million over the same period in 1996. In addition, PTT, which increased its stake in Thai Oil in September 1997, canceled plans to inject 2.7 billion baht of new capital into the company after the government cut PTT's investment budget. PTT officials expect refining margins to remain as low as $2 to $3 per barrel as compared to $6 to $7 per barrel in the early 1990s. Moreover, domestic demand for oil products is expected to rise a mere 0.4% in 1998 compared to 2.2% growth in 1997.

In response to falling margins and profits, Thai refiners have been trying to reduce operating costs. In late 1997, the Thai government allowed refiners to reduce required petroleum stocks to help ease liquidity problems, save foreign exchange, and reduce storage costs. Refiners can now reduce reserves of refined products by 2% and are no longer required to maintain a crude oil stock surplus of 11% in excess of projected demand. Moreover, Star Petroleum Refinery Co. (SPRC) is scheduled to invest $15 million in 1998 to increase capacity at its refinery in Rayong from 123,500 bbl/d to 150,000 bbl/d. The investment will enable SPRC to reduce refining costs by $1 per barrel.

The continuing economic woes have also forced refining companies to delay or cancel a number of refinery expansions and other projects. In addition, the companies will still need to upgrade their refineries to meet Thai environmental regulations for the production of low sulphur diesel. The regulations stipulate that all refineries have gas oil desulphurisers by 1999.

In another cost saving move, Rayong Refinery Co. (RRC) and SPRC may integrate their refineries in Rayong with Chevron Corp. (60%) and PTT's (40%) $14 million aromatics plant. The aromatics plant, currently under construction, will produce 350,000 tons per year of paraxylene, a petrochemical product used to make purified terephthalic acid, a raw material for producing polyester film, packaging resin, and fabrics. RRC and SPRC will supply feedstocks such as naphtha to the aromatics plant and will facilitate cost savings of an estimated $100 million by integrating facilities, land and labor. A formal agreement has not been reached, but the new plant is scheduled to come on stream in mid-2000.

NATURAL GAS
Thailand contains about 7.0 trillion cubic feet (Tcf) of proven natural gas reserves, of which it produced (and consumed) 428 billion cubic feet (Bcf) in 1996. Much of the country's natural gas is used for generating electricity. Bongkot is Thailand's largest gas field, located 400 miles south of Bangkok in the Gulf of Thailand. In February 1998, Total SA, which holds a 30% interest, revised its estimate for proven and probable natural gas reserves at Bongkot to 4.5 Tcf, up 40% from its 1997 estimate.

Thailand's economic crisis has had a significant impact on its natural gas sector. Since the depreciation of the baht began in July, Thailand's domestic demand for natural gas has declined. This has prompted PTT to revise downward its annual growth forecasts for natural gas demand from 8%-10% to 5%. The economic downturn also has forced PTT to cut at least 30 billion baht from its budget for gas supply procurement and new gas transmission projects. The budget cuts and declining demand have delayed several gas pipeline projects, including a planned third trunkline running from the Unocal-operated Erawan gas field in the Gulf of Thailand to Ratchaburi. The line is now expected to come onstream in 2007, six years behind schedule.

Falling gas demand also has forced the country to re-examine two gas deals signed with Oman and Indonesia. In 1996, the Thai government signed a memorandum of understanding (MoU) to purchase 1 million tons per year (Mmt/y) of Omani liquefied natural gas (LNG) beginning in 2001, rising to 1.7 Mmt/y in 2003 and 2.2 Mmt/y in 2004. However, Thailand announced in November 1997 a delay in the start of the deal to 2007. In May 1997, PTT signed a MoU with Indonesia's Pertamina for PTT to purchase natural gas from Indonesia's Natuna gas field at an initial rate of 500 Mmcf/d starting in 2003 and increasing to 1 Bcf/d beginning in 2007. The deal also had provisions for a 1,000-mile subsea pipeline to transport the gas from Natuna to Thailand via Malaysian waters. In addition PTT was to acquire a 12%-15% stake in the Natuna development project. In November 1997, Pertamina and PTT reached an agreement to delay the start of the deal from 2003 to 2007.

Unocal Thailand is the country's largest gas producer, and despite Thailand's economic situation and declining gas demand, it plans to increase its natural gas production. Unocal's current plans call for production increases from current rates of around 1 Bcf/d to 1.3 Bcf/d by late 1998 and 1.5 Bcf/d by late 1999. To achieve higher production rates, Unocal has expanded its drilling program, including 145 wells in 1997 and 170 wells in 1998. By the end of 1998, Unocal will have brought on-line three new gas fields, Plamuk, Pladaeng, and Pailin. In October 1997, Unocal began drilling exploratory wells with its partners Total and Statoil in blocks W8/38 and W9/38, located offshore in the Andaman Sea. However, by December 1997, Unocal determined that the gas deposits were too small for commercial purposes, and relinquished its exploration rights. Unocal now has turned its attention to blocks 10A and 11A. For 1998, Unocal plans to perform three-dimensional seismic studies over the concession areas followed by exploration and appraisal drilling.

In other exploration activities, Texaco drilled four exploratory wells on two of its concession blocks in the Gulf of Thailand in October 1997. One well was drilled in block 11/38 while three more were drilled in block 12/32 near the Busabong 2X structure. In early 1997, Busabong tested at a rate of 21 Mmcf/d of gas, with estimated reserves of 1.1 Tcf. If exploration is successful, Texaco expects to commence commercial production in 2001. Also in October 1997, PTTEP and its partners Total, Thai Energy, and Statoil won a concession to explore block B13/38. Exploration is set to begin in mid-1998 with PTTEP holding a 40% stake, Total 30%, Thai Energy 20%, and Statoil 10%. In addition, PTTEP announced in January 1998 its plans to become a leading upstream petroleum concern in Southeast Asia by 2000. The company plans to expand its exploration activities to include China; the Thai-Vietnamese overlapping claims in the Gulf of Thailand; Bangladesh; South Asia; and the Middle East.

The $1 billion, 416-mile Thai-Burmese natural gas pipeline, running from Burma's Yadana gas field, located in the Andaman Sea, to an Electricity Generating Authority of Thailand (EGAT) power plant in Ratchaburi province is near completion. The line was scheduled for completion in April 1998 in time to begin delivering 550 Mmcf/d of gas to the plant on July 1, 1998. However, in January 1998, the Thai government suspended construction of a 7-mile section of the line that runs through the Sai Yok forest reserve near the Thai-Burmese boarder amid protests from environmentalists and conservation groups. Opponents of the pipeline argued that the line could damage the forest and surrounding communities and that Thailand has sufficient indigenous gas reserves to render the pipeline unnecessary. In early March 1998, a committee set up to hear opposition arguments rejected their claims, allowing construction to move forward. However, due to the delay, the pipeline may not be completed in April. Moreover, EGAT has recently confirmed that the completion of the power plant will be delayed until October 1998 due to material delivery delays.

Joint Development Area
One of Thailand's most active areas of gas exploration is the Malaysian-Thailand Joint Development Area (JDA) located in the lower part of the Gulf of Thailand, and governed by the Malaysia-Thailand Joint Authority (MTJA). The JDA covers blocks A-18 and B-17 to C-19, and as of September 1997, 10 gas fields have been discovered from 20 exploration wells. A 50:50 partnership between Petronas Carigali and Triton Energy Ltd. is developing block A-18 while PTTEP and Petronas Carigali also share equal interests in the remaining blocks. The 10 fields are: Cakerawala, Surijaya, Bulan, Bumi, Bumi East, Senja, Muda, Tapi, Jengka, and Amarit. The JDA contains estimated reserves of 10 Tcf, and the two countries are currently working on plans to further develop the area.

PTT and Malaysia's Petronas already have signed an agreement to purchase 600 Mmcf/d of JDA gas beginning in 2000. In addition, PTT has agreed to purchase 390 Mmcf/d of gas over the next 10 years from the Cakerawala field, the first JDA field to come on stream. Cakerawala contains estimated reserves of 2 Tcf. The promise of the JDA also has revived discussions on the so-called land bridge project. This project involves, among other things, the construction of a 186-mile gas pipeline, known as the trans-Thailand-Malaysia pipeline, running from the JDA gas fields to Songkhla, Thailand and then on to the northern Malaysian state of Perlis. The line is expected to be completed in 2000 in time for the first gas deliveries. The gas may be used to support a number of joint venture projects in northern Malaysia and southern Thailand such as a gas separation plant, power station, and industrial gas distribution system.

ELECTRIC POWER
Thailand currently has around 17,500 megawatts (MW) of electric generation capacity and, in 1996, it generated approximately 82 billion kilowatt-hours of electricity. The decline of the Thai economy has resulted in a decline in domestic demand for electricity. This situation has compelled EGAT, the state-owned electricity company, to revise its electricity demand projections. EGAT's projections indicate that demand for electricity from 1997-2001 will increase on average 7.3%, or 1,200 MW, per year. Previous estimates projected annual growth rates of 8%-9%. By 2001, peak load demand is expected to be 19,049 MW or 11% below previous estimates. In response to the slower growth projections, EGAT has postponed or delayed a number of projects including: delaying the commissioning of the third and fourth 300 MW thermal units of the Ratchaburi power complex by three years to 2004 and 2005, respectively; postponing the start-up of the second 300 MW thermal unit at the Krabi power plant from 2001 to 2005; reducing power purchases from small power producers (SPPs) from 3,200 MW to 2,000 MW for the period 1997-2003; delaying the next solicitation for power purchases from independent power producers (IPPs) from 1998 to 1999 and reducing these purchases from 4,000 MW to 2,300 MW; and delaying power purchases from three Laotian projects - the lignite-fired Hongsa project and the Nam Ngum 1-2 hydro projects to 2004 and 2005 respectively.

Following the sudden depreciation of the baht in July 1997, IPPs (private consortia which have pledged to build power stations in Thailand and sell the electricity to EGAT) were in a situation where their projects would no longer be profitable. The IPPs have agreements to sell power to EGAT at prices denominated in baht, but most of their costs and financing are in foreign currency. However, in September 1997, EGAT agreed to absorb most of the increased costs incurred by the IPPs as a result of the baht depreciation EGAT calculated the increased dollar costs over Bt27 of building and financing a new plant and has agreed to raise the purchase price of electricity accordingly. The new terms effectively have saved the IPP program from collapsing. Currently, there are six IPPs that have agreements with EGAT to supply more than 5,000 MW to Thailand's national grid.

COUNTRY OVERVIEW
Chief of State: King Phumiphon Adunyadet (since 6/9/46)
Prime Minister: Chuan Likphai
Independence: 1238 (traditional founding date)
Population (1998E): 61.5 million
Location/Size: Southeastern Asia/514,000 square kilometers (198,455 square miles), about twice the size of Wyoming
Major Cities: Bangkok (capital)
Language: Thai, English, ethnic and regional dialects
Ethnic Groups: Thai (75%), Chinese (14%), other (11%)
Religions: Buddhism, 95%; Muslim, 4%; Other, 1%
Defense (8/96): Army, 150,000; Navy, 64,000; Air Force, 40,000; Paramilitary Forces, 139,500

ECONOMIC OVERVIEW
Currency: Baht (B)
Exchange Rate (3/27/98): US$1 = Bt37.8
Real Gross Domestic Product (1990 Dollars) (1998E): $131.4 billion
Real GDP Growth Rate (1997): -0.5% 1998E: -3.5%
Inflation Rate (consumer prices) (1998E): 12.5%
Unemployment Rate (1996E): 2.6%
External Debt (1998E): $63.3 billion
Current Account Balance (1998E): $1.8 billion
Exports (1998E): $59.3 billion
Imports (1998E): $53.6 billion
Trade Balance (1998E): $5.64 billion
Major Export Products (1998): Textiles, canned food, integrated circuits, rice, tapioca, rubber, maize, precious stones
Major Import Products (1998): Food and beverages, household appliances, chemicals, base metals, machinery, fuel and lubricants
Major Trading Partners (1998): Japan, United States, Malaysia, Singapore, EU

ENERGY OVERVIEW
Science, Technology, and Environment Minister: Yingphan Manasikan
Proven Oil Reserves (1/1/98): 295.3 million barrels
Oil Production (1997E): 107,000 barrels per day (bbl/d), of which 71,000 bbl/d is crude oil
Oil Consumption (1997E): 736,000 bbl/d
Net Oil Imports (1997E): 629,000 bbl/d
Crude Oil Refining Capacity (1/1/98): 704,250 bbl/d
Natural Gas Reserves (1/1/98): 7.0 trillion cubic feet
Natural Gas Consumption/Production (1996E): 428 billion cubic feet (bcf)
Recoverable Coal Reserves (12/31/93): 1.1 billion short tons
Coal Production (1996E): 21.1 million short tons
Coal Consumption (1996E): 23.9 million short tons
Electric Generation Capacity (1/1/96E): 17.5 gigawatts
Electricity Generation (1996E): 82.0 billion kilowatthours

ENVIRONMENT OVERVIEW
Total Energy Consumption (1996E): 2.33 quadrillion Btu
Energy Consumption per Capita (1996E): 38.9 billion Btu
Energy Consumption per $1987 of GDP (1996E): 20.2 thousand Btu (vs. 16.7 thousand Btu in US)
Energy-Related Carbon Emissions (1996E): 44 million metric tons (0.7% of world carbon emissions)
Carbon Emissions per Capita (1996E): 0.7 metric tons
Carbon Emissions per $1987 of GDP (1996E): 0.38 metric tons (vs. 0.26 metric tons in US)
Major Environmental Issues: Air pollution from vehicle emissions, water pollution from organic and factory wastes

ENERGY INDUSTRY
Major Foreign Oil Company Involvement: Unocal; Total; Statoil; Mitsubishi
State Energy Companies: PTT is the state oil company.
Electricity Generating Authority of Thailand (EGAT), Thailand's state electric power authority, has spun off Electricity Generating PCL (EGCOMP), but still owns a 41% share. EGAT also has sold off the Electricity Generating Public Co. Ltd. of Thailand (EGCO). Thailand has two other state-owned electric companies: the Metropolitan Electricity Authority (MEA) and the Provincial Electricity Authority (PEA).
Major Refineries (Crude oil refining capacity - bbl/d): Thai Oil Co. Ltd (207,000); Esso Standard Thailand Ltd. (167,000); Shell Company of Thailand (145,000), Star Petroleum Refining Co., Ltd. (123,500), Petroleum Authority of Thailand (61,750)
Major Ports: Bangkok; Laem Chabang; Pattani; Phuket; Sattahip; Si Racha; Songkhia

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Links to other sites:
1997 CIA World Factbook - Thailand
U.S. Department of Energy's Office of Fossil Energy's International section - Thailand
U.S. State Department's Consular Information Sheet - Thailand
U.S. State Department's Country Commercial Guide - Thailand
Library of Congress Country Study on Thailand
U.S. State Department Background Notes on Thailand - November 1997


The following links are provided solely as a service to our customers, and therefore should not be construed as advocating or reflecting any position of the Energy Information Administration (EIA) or the United States Government. In addition, EIA does not guarantee the content or accuracy of any information presented in linked sites.

Office of the Prime Minister
Parliament of Thailand
Petroleum Authority of Thailand
Royal Thai Embassy in the United States
National Energy Policy Office, Office of the Prime Minister as provided by the Office of Science and Technology at the Royal Thai Embassy in the United States
Electricity Generating Authority of Thailand as provided by the Office of Science and Technology at the Royal Thai Embassy in the United States
Ministry of Science, Technology, and Environment as provided by the Office of Science and Technology at the Royal Thai Embassy in the United States

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File last modified: April 2, 1998

Contact:

Lowell Feld
lfeld@eia.doe.gov
Phone: (202)586-9502
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