Gas production in the Erawan field is expected to undergo a temporary interruption when Chevron Thailand Exploration and Production transfers its concession to PTT Exploration and Production Plc (PTTEP) in 2022.
In the long term, PTTEP stands to gain greater benefits as the operator of both the Erawan and Bongkot gas blocks because the company can manage operating costs of both offshore locations in the Gulf of Thailand.
Energy expert Manoon Siriwan said there will be some short-term interruptions from the gas supply to national power generation, which is operated by state-run Electricity Generating Authority of Thailand.
"The ownership transition period for the Erawan field will see a temporary interruption because it is the biggest gas resource, representing almost 25% of the country's gas supply," he said.
Mr Manoon said the change in ownership resulting from the latest auction differs from previous deals, which saw no interruptions to production.
In 2004, Shell Exploration Co exited from the onshore Sirikit crude oil resource in Kamphaeng Phet, and ownership was sold to PTTEP in 2004.
A year later, Unocal, which was the operator of the Erawan field, went bankrupt and transferred all business to Chevron.
"Previous handovers were different from the latest auction because they saw changes in ownership only while petroleum production continued," Mr Manoon said. "Chevron may not make new explorations before the Erawan concession expiry, and gas production during the transfer period to PTTEP will drop before they complete the transaction."
Sarawut Kaewtathip, deputy director-general of the Mineral Fuels Department, said that as the auction host, the department is concerned about the interruption issue.
In the bidding proposal, participants must propose a preventive measure against the interruption of gas output during the transition period.
Phongsthorn Thavisin, PTTEP's chief executive, said that after signing contract with the government in February the company plans to hold talks with Chevron in order to ensure a smooth transition.
"We are open to the Mineral Fuels Department overseeing the negotiations," Mr Phongsthorn said. "PTTEP will maintain a number of Chevron staff in the Erawan field and is open to signing them as PTTEP employees."
He said the gas selling price proposed to the government was estimated to gain a suitable level of benefits in return for its investment in the two blocks.
Mr Phongsthorn said PTTEP is committed to generating returns to shareholders and creditors, as well as sharing profits from the two blocks with the government.
Last week, PTTEP reported an average production cost of US$30 per barrel from its operations across 14 countries.
Mr Phongstorn said the average cost can be trimmed, particularly in the Gulf of Thailand, where costs are lower than $30 per barrel.
Maintaining the gas price at a low level will improve national competitiveness by lowering infrastructure costs, which will be a key engine for the country's economy because the government's new targeted industries will be influenced by electricity prices and machine use more than wages, he said.
On Thursday, the Energy Ministry announced that PTTEP won the bids to explore and produce natural gas in the Erawan (G1/61) and Bongkot (G2/61) blocks in the Gulf of Thailand.
US-based Chevron has operated the Erawan block for 37 years and was the country's first petroleum explorer.
PTTEP runs the Bongkot gas block.
