Myanmar crisis and gas field dispute: How will Thailand’s gas-based economy be sustained?

Wang Yuanda


Thailand’s LNG import reached an all-time high of 813,000 tonnes in February 2022, a 69% increase from January 2022 and a 56% increase from the same month last year. PTT – Thailand’s national oil company – has stepped up spot LNG purchase in the past few months despite the hefty price. ICIS LNG Edge has revealed that a total of 23 LNG spot cargoes were delivered into the country within the period of July 2021 until today – uncommon for the price-sensitive Thai importer. This is mainly due to the sharp decline in domestic gas production. The kingdom’s high reliance on gas for power and its gas-based economy makes it extremely challenging to switch away from gas. ICIS expects Thailand’s LNG import to remain high for the rest of 2022 and reach 8.6 million tonnes – an all time high.

Thailand’s gas-based economy

60% of Thailand’s gas consumption goes to the power sector. Although the country’s total power gen increased by 1.8% to 209 TWh in 2021 from 2020, it has not gone back yet to its peak level of 212 TWh – achieved in 2019 – due to COVID-related demand destruction on tourism and industry sectors. Gas-fired power accounted for over 70% of the total power mix prior to 2016 but fell to 64% in 2021. This is a direct result from the government’s policy to reduce gas share in power mix by investing in renewable energy and importing electricity from Laos. Last year, Thailand’s imported electricity increased by 13%. We believe this growth will further accelerate given Thailand has agreed to buy more electricity from Laos. Consequently, gas demand from power this year is estimated to be in line with 2021 notwithstanding Thailand’s total power demand will grow by 1.6% from economic recovery. Meanwhile, the easing of Covid-related restrictions and the resumption of tourism will boost gas consumption in both the commercial and industrial sectors. ICIS expects the latter to grow by 5% when compared with 2021. The country’s annual gas demand is expected to grow by 0.5% (yoy) this year.

Erawan gas field dispute

The significant rise of Thailand’s LNG imports is attributed mostly to the production drop in the Erawan gas field. Thailand’s domestic gas production accounts for 70% of the country’s total gas supply. The Erawan field is the single largest gas-producing field in the country. Its production used to account for more than one-third of the country’s total gas production and 27% of the country’s total gas demand. However, the continuous production decline in the past years meant that these figures fell to 27% and 20% respectively, according to EPPO. From an average of 1,186 mmscfd monthly in 2020, Erawan’s production dramatically fell to 801 mmscfd in July 2021 and to 545 mmscfd in December 2021 – with no signs of slowing.

Chevron has been the operator of the Erawan field since it’s commissioning in 1981. The operatorship of the field will be transferred from Chevron to the stated-owned PTTEP following the expiration of the concession in April 2022. However, Chevron has been in disputes with the Thai government over decommissioning liabilities. Although the two parties agreed in December 2021 to allow PTTEP to conduct production-related work ahead of April 2022, it is unlikely for Erawan to reach the 800 mmscfd production level as stipulated in the production-sharing contract this year. The complex transition issues will delay the scheduled production plan. Therefore, Thailand is exposed to gas shortage risk in 2022.

Can Myanmar gas save the day?

Besides LNG and domestic production, Thailand also imports pipe gas from Myanmar, accounting for 14% of the country’s gas mix. The gas is mainly from the Yadana and Zawtika projects to which PTTEP are both shareholders. According to PTTEP, Yadana contributes 10% – 15% of Thailand’s gas demand and serves around 50% of gas consumption in Myanmar. The project’s largest shareholder and operator — TotalEnergies — has decided to exit from Myanmar in January 2022 due to the deteriorating humanitarian crisis since the nation’s military coup. While PTTEP has expressed interest in taking over the field’s operatorship from TotalEnergies, chances are low that it will bring additional gas to Thailand given the importance of the field to Myanmar’s domestic gas supply. Myanmar government – despite being left with not much option – is also hesitant in granting PTTEP the majority share, out of energy security concerns. Although TotalEnergies exit is unlikely to cause disruption to Thailand’s pipe gas supply, Myanmar gas will not be able to replace Thailand’s domestic gas shortfall.

According to the ICIS LNG Edge, there are currently 5.2 mtpa long-term contract volume in place for Thailand. As such, the kingdom will need to continue buying the prohibitive spot LNG in 2022 unless other fuel source can come to its immediate rescue – an unlikely scenario due to the stickiness in its gas-based economy. For further data and insight, do reach out to ICIS LNG Analytics


ICIS Premium news service

The subscription platform provides access to our full range of breaking news and analysis

Contact us now to find out more

Speak with ICIS

Now, more than ever, dynamic insights are key to navigating complex, volatile commodity markets. Access to expert insights on the latest industry developments and tracking market changes are vital in making sustainable business decisions.

Want to learn about how we can work together to bring you actionable insight and support your business decisions?

Need Help?

Need Help?