Oxford Business Group: Thailand Moves to Diversify its Energy Mix

Providing the fuel for Thailand’s economic growth engine, the energy sector continues to expand in order to meet the growing demands of the country. Domestic primary energy consumption is weighted heavily towards fossil fuels, which accounted for 98% of primary energy consumption in 2014. Natural gas has become the fulcrum upon which energy development is now focused in both the hydrocarbon and electricity segments, with the fuel representing 44% of total primary energy usage. Oil and gas exploration and production has become increasingly focused on natural gas over the years as crude oil production has plateaued and the power generation sector has become ever-more reliant on gas for over half of all power production. Static crude oil production from mature fields has resulted in a shift away from the fuel for usage outside of the transportation segment, as the country becomes increasingly reliant on imports to meet growing demand. Less-expensive coal and lignite maintain an 18% share of the primary energy segment, while hydropower and other renewable energy technologies, along with imported electricity, made up the remaining 2% of the total energy mix in 2014. The ratio of natural gas within the country’s primary energy mix is likely to soon be nearing its high-water mark as domestic supplies wane. In light of this situation, the government has begun to place a new emphasis on energy diversification and a concurrent reduction in overall consumption.

INCREASED CONSUMPTION: Driven by continued industrial and financial growth, total primary energy consumption in 2014 increased by 2.6% from that in 2013 to a level of 2053 barrels of oil equivalent per day (boepd). Domestic demand continues to outstrip supply, as total primary energy production in 2014 decreased by just 0.4% over 2013 levels to 1073 boepd. As a result, energy net imports increased 4.4% to 1171 boepd, with commercial energy imports accounting for 57% of primary industrial and commercial energy consumption.

Concerted efforts by foreign oil majors including Chevron, Mitsui, Petronas, Total and ExxonMobil, along with domestic operators including state majority-owned PTT Exploration and Production (PTTEP), yielded significant gains over the past decade which have only recently begun to decline. Fuelled by large discoveries, crude production peaked in 2009 at an all-time high of 154,041 boepd. MORE