PTT Exploration and Production Plc (PTTEP), Thailand's only SET-listed upstream petroleum company, plans to start operation of its offshore gas block in Mozambique's Rovuma Area 1 in the second half of this year.
Chief executive Tevin Vongvanich yesterday said the facility's total cost stood at US$20 billion, and the first lot of liquefied natural gas (LNG) would be produced in 2019, with annual capacity of 12 million tonnes. PTTEP bought 8.5% of the venture to develop the Rovuma gas block and plans to invest US$1.5 billion in the project.
Texas-based Anadarko Petroleum Corporation, an operator of the gas block, was awarded a construction contract last month, which it expects to start in the second half.
Mr Tevin said 8 million tonnes of the LNG had already secured contracts with buyers including its major shareholder PTT Plc, which would purchase 2.8 million tonnes.
Area 1 covers 2.6 million acres in the deep-water Rovuma Basin offshore from Mozambique and represents the largest gas discovery offshore from East Africa, with estimated recoverable reserves of 35-65 trillion cubic feet.
Area 1 has the potential to become one of the world's largest LNG-producing hubs and is strategically located to supply the growing Asian gas market.
"As global oil prices dipped, we revised our business plan by cutting costs and delaying non-essential projects," Mr Tevin said.
Next year, PTTEP plans to revise the operating schedule of five petroleum production projects — Myanmar's M3, Algeria's Hassi Bir Rekaiz, Australia's Cash and Maple and Canada's Oil Sands — after delays from last year.
In April 2013, the Algerian project reported successful drilling results in the first exploration phase of this block.
In the first five months of this year, PTTEP cut expenditure by $600 million or 15% to $4.2 billion in a bid to cope with sharply diving crude prices.
For domestic wells, Mr Tevin said the Bongkot Field concession would expire in 2022 and 2023, and if the government decided not to renew it, PTTEP would drill only new wells there until 2017. Normally, a gas well lasts about three years.
The Thai government will have one year from now to decide on concession renewal, he said, adding that governments usually renewed concessions rather than grant new ones since new producers took time to start their projects.
"They want to make sure production continues without disruption but will negotiate for a shareholding to get a return from the operation," Mr Tevin added.
PTTEP shares closed yesterday on the SET at 111 baht, up 4.50 baht, in heavy trade worth 1.17 billion baht.