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Myanmar’s Yetagun gasfield production halt to prop up Thailand’s LNG imports

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Myanmar’s Yetagun gasfield production halt to prop up Thailand’s LNG imports


Yetagun one of three fields exporting gas from Myanmar to Thailand

Production decline for several years, exports fall to 12 MMcf/d in Jan 2021

Thailand diversifies into LNG, overseas deals to backstop supply

  • Author
  • Eric Yep    Shermaine Ang
  • Editor
  • Norazlina Juma'at
  • Commodity
  • Natural Gas

Singapore — A force majeure declaration by Malaysia's Petronas at its Yetagun field in Myanmar and a complete gas production halt at the upstream project are likely to support Thailand's spot LNG imports as it looks to offset one of its main sources of pipeline gas supply from its Southeast Asian neighbor.

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Thailand's national oil company PTT has been exposed to declining offshore gas production in Myanmar for several years, most importantly from the Yetagun gas field that has been posting a steady decline in output since around 2013, which its operators found difficult to arrest or reverse.

With its own domestic gas output falling, Thailand has diversified its imports through seaborne LNG for the last few years, and pushed its national explorer PTT Exploration & Production to buy equity stakes in overseas gas assets.

Recent exploration work in offshore Myanmar was designed to boost domestic production, and backstop some of the declining pipeline supply to Thailand and China, but even that has become uncertain due to the recent military coup that brought economic activity to a standstill.

Petronas said in a statement late April 2 that its upstream subsidiary, PC Myanmar (Hong Kong) Limited, had declared force majeure on its Yetagun field in Myanmar on April 1 due to the depletion of gas production, and temporarily ceased production at the field until further notice.

The Yetagun gas field, located in the Andaman Sea, offshore Myanmar, in Blocks M12, M13 and M14, is one of three main gas fields that supply pipeline gas to Thailand, the other two being Yadana and Zawtika.

Thailand's exploration company PTTEP, a subsidiary of national oil company PTT, did not immediately respond to queries on the force majeure. PCML said it was taking all necessary measures to resume production as soon as possible.

"The decision was made following challenges in the wells deliverability that resulted in the production rate dropping below the technical threshold of the offshore gas processing plant," Petronas said in the statement.

"Prior to the cessation of production, the Yetagun field was producing well below the technical turndown rate of its facilities. There has been a drastic decline in the production level due to subsurface challenges in the field since January 2021 and it has further deteriorated recently," PCML's country head Liau Min Hoe said.

Liau said continuing to produce at a low rate would create significant risks to the integrity of the company's assets and the safety of its people.

"As a responsible operator, we had to temporarily cease production and declare force majeure. We have put in place an intervention plan to mitigate the matter, and have informed the host authority, our partners and gas buyer of our decision," he added.

Thailand ramps up LNG to offset decline in piped gas imports

Production declines at Yetagun gas field

Petronas has been the operator of the Yetagun Gas Project since 2003, in which it has a 40.9% participating interest, while state-run Myanma Oil and Gas Enterprise holds 20.5%, Nippon Oil Exploration (Myanmar) holds 19.3% and PTTEP International holds the remaining 19.3%.

Between 2005 and 2013, Thailand was importing more than 400 MMcf/day from Yetagun on average, but by 2020 this had dropped to an average of just 52 MMcf/d, according to data from the country's Energy Policy and Planning Office. In January 2021, gas imports from Yetagun had fallen as low as 12 MMcf/d.

Overall, Thailand imported 696.2 MMcf/d of natural gas from Myanmar in February, up 6.9% year on year, and 664 MMcf/d over January-February, up 15.6%, customs data showed.

Thailand first started LNG imports in 2011 from its Map Ta Phut LNG terminal, ramping up from an average of 98 MMcf/d in 2011 to 743 MMcf/d in 2020, the data showed.

In January, PTTEP made one of its largest overseas deals, buying a 20% participating interest in Oman's Block 61 from oil major BP for a total consideration of $2.6 billion. ‎‎Block 61 contains the largest tight gas ‎development in the Middle East, according to BP, and after the deal BP will hold a 40% interest in the block, OQ will have 30%, PTTEP ‎‎20% and Petronas 10%.

PTT has been active in the LNG spot market recently, buying four cargoes for April-May delivery in March, with a slight uptick in usual procurement volumes.

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