BKK Post, March 7, 1998 ENERGY / YA

[burma@xxxxxxxxxx]

March 7, 1998
ENERGY / YADANA GAS CONTRACT CHANGE PROPOSED 

PTT wants lower price and volume of supply
Economic crisis sees lower demand for gas 
Chatrudee Theparat Boonsong Kositchotethana

The Petroleum Authority of Thailand (PTT) will seek to amend the gas 
deal with the Yadana gas developing consortium to reduce the agreed 
supply volume and price of the offshore Burmese gas.

Specifically, the PTT will seek a 20% cut in the agreed gas tariff from 
the base price of US$3 per one million BTU (British thermal units) as 
well as a reduction in the gas intake from the average 525 million cubic 
feet per day (MMcfd) to 400 MMcfd.

Piti Yimprasert, president of PTT Gas, part of the Petroleum Authority 
of Thailand, yesterday pointed to the need to amend the 30-year contract 
concluded in 1995.

Lower demand for gas in Thailand and the country's economic crisis are 
the reasons behind the PTT's move to seek amendment of the contract.

Protests by environmentalists and non-governmental organisation 
activities in Thailand have contributed to problems faced by the PTT, 
delaying pipeline work.

The negotiations will be held with the Yadana group consisting of Total 
of France, with a 31.24% stake in Yadana; the US energy firm Unocal 
Corp, 28.26%; PTT Exploration and Production Plc of Thailand (part of 
the PTT), 25.5%; and Burmese state-owned Myanma Oil and Gas Enterprise, 
15%. The consortium is investing $1 billion in the scheme.

The PTT is bound to take delivery of Yadana gas in July under the 
"take-or-pay" deal.

At least for the time being, it is clear that construction of the first 
two units of Ratchaburi power plant will be ready to take the Yadana gas 
in July as planned. This may also prompt the PTT to ask for the 
consortium to delay the start of gas delivery beyond July, according to 
Dr Piti.

He said the pipe-laying contractor, the Thai-German joint venture of 
Tasco-Mannessmann, had claimed an additional payment of US$40 million 
from the PTT, alleging the agency had failed to make arrangements for it 
to complete the work as scheduled. The claim would push the pipeline 
project cost beyond 16.5 billion baht.

The Kanchanaburi-Ratchaburi pipeline has faced opposition from 
environmentalists and NGOs activities because six km section of the line 
will be laid through the fertile forest in Kanchanaburi.

NGO activists have in recent months camped out at the forest to block 
the pipe-laying work which is now 6-7% behind schedule.

In another development, Dr Piti said additional gas discovery in the 
Yadana field had strengthened the chance for Thailand to increase 
natural gas procurement from Burma.

It also boosted the economic viabilities of laying a new onshore gas 
pipeline in Thailand, specifically from Ratchaburi to Wang Noi in 
Ayutthaya, bringing more Burmese gas to consumers in Thailand.

Dr Piti pointed to this picture as he revealed that gas reserves at 
Yadana, about 240 km south of Rangoon in the Gulf of Martaban, had 
soared from 5.6 trillion cubic feet (Tcf) to nine Tcf.

But he said the realisation of the proposed gas line from Ratchaburi to 
Wang Noi was marred by the budget constraints faced by the PTT. The 
economic crisis had forced the government to slash the state oil 
investment this year, and the PTT was looking at opportunities to 
reverse this.

If that was not possible, the private sector would be given a chance to 
invest in the pipeline project to ensure the gas line would come on line 
next year as targeted. 

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