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Hot news: Chevron put up a $10 billion bailout on Erawan Demolition Plan
The Ministry of Energy is preparing a proposal for the Cabinet to demolish 49 Erawan platforms in the Gulf of Thailand. Chevron is expected to pay a guarantee of 10 billion Baht.
Mr Sontirat Sonthijirawong, The Minister of Energy, revealed that the Ministry of Energy is preparing a proposal for the next Cabinet’s meeting to demolish the Erawan petroleum platforms in the Gulf of Thailand. Currently, the company Chevron (Thailand) Limited is the concessionaire and its concession will expire in 2022. In any case, there will not be any demolition because it could have effects on the local ecosystem. However, the announcement of the new bidding round for petroleum resources, expected by the end of March, has been postponed indefinitely, due to the COVID-19 outbreak.
Mr Kulit Sombatsiri, the Permanent Secretary of the Ministry of Energy, as chairman of the Petroleum Committee, revealed that the demolition of the Erawan petroleum platforms consists in the demolition of 49 platforms out of the 191 existing in the site of Erawan.
However, for prudence, the government allocated 400 million Baht for the negotiation with Chevron and future arbitration, since the negotiations do not seem to prosecute positively. Mr Pairoj Kawiyanan, CEO of Chevron (Thailand) Limited, said that the company is currently awaiting clarity from the government on the approval of the demolition plan of the Erawan petroleum platforms. Initially, the government had options about demolishing the platforms and the pipes or just the platforms, and Chevron is waiting to see the choice of the government. In case of a fair agreement the company is ready to provide guarantees and to complete the demolition before the end of the contract on 23rd April 2022. The news reported that The Department of Mineral Fuels hired a 3rd party to assess the price of a security guarantee, established in around US$ 7 million for each platform. Therefore, Chevron is expected to place a guarantee of 10 billion Baht for the demolition of the 49 Platforms. If the Cabinet approves the demolition plan, Chevron has to propose a detailed plan for the demolition to the Department of Fuel, then proceed to provide the guarantee and with the demolition.
The concession contract for the Erawan area in the Gulf of Thailand will expire in 2022. The new concessionaire PTTEP in cooperation with MPG2 (Thailand) Ltd. under a Product Sharing Contract (PSC), will maintain a production capacity of 800 million cubic feet per day in Erawan area and of 700 million cubic feet per day in Bongkot area to ensure a total production of 1,500 million cubic feet per day. Currently, the total production capacity is 2,200 million cubic feet per day. According to PTTEP’s 5-year plan, the investment budgets for Erawan and Bongkot are respectively US$ 600 million and US$ 450 million.
