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Thailand’s Energy Strategies

Thailand’s Energy Strategies. Energy Situation. Energy supply is available BUT with much higher prices. Thailand still depends heavily on energy imports, especially oil. Energy Situation. Crude and Petroleum Product Prices in 2006. ดีเซล. Diesel. เบนซิน. Gasoline. 70 US$/barrel.

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Thailand’s Energy Strategies

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  1. Thailand’s Energy Strategies

  2. Energy Situation • Energy supply is available BUT with much higher prices. • Thailand still depends heavily on energy imports, especially oil.

  3. Energy Situation Crude and Petroleum Product Prices in 2006 ดีเซล Diesel เบนซิน Gasoline 70 US$/barrel 71 US$/barrel น้ำมันดิบดูไบ Dubai crude Dec06 Jun07 • Forecast on the Dubai crude price(Deutsche Bank, Morgan Stanley, Goldman Sachs) • During Jul-Dec 2006,the price will be about 68-70 US$/barrel. • In 2007, the price is projected to slightly increase to be about 70-71 US$/barrel.

  4. Impact of the Oil Price Crisis • Shaken stability of Thailand’s economic conditions • Trade deficit • Adverse impact on the people as the commodity prices increase

  5. Objectives of the Energy Plan • To reduce dependency on energy imports • To enhance the national energy security • To ensure that energy development is gearing towards sustainable development

  6. 1st Strategy: To Reduce Dependency on Energy Imports • Measures: • 1.1 : Diversify fuel sources & types, focusing on indigenous energy resources • 1.2 : Develop and promote the use of alternative energy • 1.3 : Improve energy efficiency of the country

  7. Measure 1.1 : Diversify fuel sources & types, focusing on indigenous energy resources • Promote the Use of Natural Gas • to replace petroleum fuels in the transport sector (“NGV Project”) • to replace fuel oil in the industrial sector

  8. Measure 1.1 : Diversify fuel sources & types, focusing on indigenous energy resources Promotion of NGV utilization to replace petroleum fuels in the transport sector

  9. Promotion of NGV Utilization Target : Increase the Number of NGV Stations • Success Indicators: • Construction sites for 200 stations have already been identified. • 200compressors has been procured; deliveries are scheduled in Q3 and Q4 of 2006. • 140 trucks for NGV transportation have been procured. • Other oil companies are encouraged to establish NGV stations, i.e. Bangchak,Shell, Esso, Caltex and Petronas by providing incentives, e.g. increased marketing margin from 0.83 baht to 2.33 baht/kg (except for PTT stations).

  10. Promotion of NGV Utilization Target : Increase the Number of NGV Vehicles (revised) • Remarks:The Plan was revised due to the following: • The expansion of NGV stations has been delayed as promotion of NGV vehicles is boosted worldwide, resulting in shortage of equipment and machinery required for the construction of NGV stations. • Tax incentives to promote NGV utilization were approved in May 2006. • Requests have been received for the installation of NGV kits for 1,785 government vehicles. Of this, 695 vehicles have been sent in and installation has been made for 668 vehicles. • There are some technical problems for NGV kit installation for diesel-engine pick-ups. • The number of NGV kit installation operators increases to 38, with 169 workshops and 14 inspectors.

  11. Tax Measures Customs Tax Exemption:equipment/cylinders until end 2008 :NGV engines Excise Tax Reduction:OEMfrom30% to20% :Retrofits from 30% to 22%, but not exceeding 50,000 baht Investment Privileges via BOI Revolving Fund Energy Conservation Promotion Fund: 2,000 Million Baht:Engine change - BMTA Buses: Credit line 1,700 M Baht, for 1,477 buses - Inter-province Buses: Credit line 300 M Baht, for 300 buses PTT 5,000 Million Baht:Engine modification/change for private operators of transport services Promotion of NGV Utilization Approved Supportive Measures for NGV Promotion

  12. Measure 1.1 : Diversify fuel sources & types, focusing on indigenous energy resources Promotion ofNG utilization to replace fuel oil in the industrial sector

  13. 4% AVERAGE 05 JAN 06 FEB 06 MAR 06 Utilization of Natural Gas to Replace Fuel Oil in the Industrial Sector Target in 2006 308 MMSCFD MMSCFD Entirely replace fuel oil • Initial Phase Target by 2011 • Industrial Estates in: • Bangkok and vicinities • Songkhla (Cha-lung) • Chonburi (Pinthong, Welgro) • Rayong (Pha-daeng) • Ayuddhaya (Saharattana Nakhorn, Hitec) • Samut Sakhorn, Singburi, Ratchaburi, etc. 2005: NG use = 2,300 M litres of fuel oil equivalent 2006: NG use = 2,900 M litres of fuel oil equivalent 2007: NG use = 3,500 M litres of fuel oil equivalent

  14. Measure 1.2 : Develop and promote the use of alternative energy Promotion of Gasohol Utilization

  15. Promotion of Gasohol Utilization Current Status Cabinet Resolution of 17 May 05 Approving the discontinuation of Octane 95 Gasoline Distribution as from 1 Jan 07 • Current Gasohol Utilization • Gasohol Utilization = 3.5 M litres/day • 3,103 service stations • Ethanol Production • (1.1 M litres/day) • Currently, 4 plants are in operation, with a total capacity of 580,000 litres/day and actual production at 490,000 litres/day. • By Dec 2006, 4 more plants will be on stream, with a total capacity of 510,000 litres/day, using:- cassava : 210,000litres/day - molasses :300,000litres/day There are 30 new applicants for ethanol plant construction. Biofuel Development & Promotion Committee (BDPC) is urging the plants with licenses granted to submit documents on the equipment procurement plan + down payment + LC placement by 31Jul06; otherwise, the licenses will be revoked.

  16. Promotion of Gasohol Utilization Demand & Supply 2006–07 Installed Capacity Actual Production as planned Ethanol Requirement to produce Gasohol 95 Actual Production in case new plants are delayed for 2 months Remarks: - During Sep-Nov06, the supply will drop as Thai Agro Energy has notified of its planned shut down due to raw material shortage. - For the plants using cassava, the actual production is expected at 50% of the capacity in the 1st year and 75% in the 2nd year.

  17. Promotion of Gasohol Utilization Action Plan until end of 2006 Monitoring Agency • Speed up the 4 new plants to be on stream by Dec 06 • Increase the number of Gasohol 95 stations nationwide • Speed up co-investment between Thai Oil & Liquor Distillery Organization in ethanol production from cassavaat 500,000 litres/day • Promote “Contract Farming” between Ethanol Plants using cassava and Farmers (Pilot project for 3 plants) MOEN MOEN/Oil Companies MOEN/MOF MOAC/MOEN/ Bank of Agriculture & Agricultural Cooperatives (BAAC)/MOI

  18. Promotion of Gasohol Utilization Gasohol Road Map: Long Term (2007-11) Ethanol Hub 2008: distribute E100 in certain areas 2009: distribute E10 nationwide 2006 2007 2008 2009 2010 2011 Agency Action Amount(M litres/day) Replace MTBE by Ethanol MOEN MOAC Improve cassava yield 5 tons/rai and sugarcane 15 tons/rai Improve cassava yield 10 tons/rai and sugarcane 20 tons/rai Gasohol 95 (average) 8 8.1 8.3 8.5 8.6 4 0.2 13 Gasohol 91 (average) 3 8 12.4 12.7 Average ethanol requirement to produce gasohol 1.1 2.1 2.1 1.6 0.42 2.2 0.46 Average actual ethanol production MOEN/ BDPC 1.6 2.1+ Awaiting licenses: 30 plants Total saving from oil import reduction (Billion Baht/yr) 8 12 15 15 16 3 NB:- Domestic raw materials will be sufficient if the improvement of yield/rai is achieved as planned by the MOAC. - MOEN has liaised with automobile manufacturers and oil traders regarding the policy to promote the use of E10-E100 in 2007.

  19. Promotion of Gasohol Utilization Promotional Measures Monitoring Agency • 1 Aug 06: revoke the licenses of new plants that fail to operate as scheduled and liberalize the ethanol production business. • In case the construction of 4 new ethanol plants scheduled to start operation in Dec06 is delayed, there will be 2 options: • 2.1 Postpone the removal of Gasoline 95 from the market from 1 Jan 07 to 1 Apr 07 • 2.2 Import 30 M litres of ethanol in Nov 06 to build up the stock • Speed up promotion ofGasohol 91as from2007-08, and allow export of surplus ethanol from 2009 onwards. BDPC MOEN MOEN BDPC/MOEN

  20. Measure 1.2 : Develop and promote the use of alternative energy Promotion of Biodiesel Utilization

  21. 2006 2007 2008 2009 2010 2011 2012 Promotion of Biodiesel Utilization Road Map

  22. Promotion of Biodiesel Utilization Current Status • New Areas for Oil Palm Plantation (1 hectare = 6.25 rai) • Target in 2006 720,000 rais • Palm plantation 05/06 620,000 rais • Credit granted by Bankof Agriculture & Agricultural Cooperatives 2,583 M Bt • Biodiesel Specifications • Commercial scale – announced 11Jul05 & effective 23Sep05 • Community scale for agricultural machinery – announced 30Jun06 & effective 21Jul06 • Commercial Biodiesel • 3 production plants of B100, with a total production capacity of 350,000 litres/day (SunTech 500,000 litres/day – COD Jul06) • 35 service stations for B5 (PTT & Bangchak), with a total sale of 100,000 litres/day sale to lorries & pick-up trucks • Retail price of B5 is lower than diesel priceat 0.50 Baht/litre Community-Based Biodiesel (Pilot Project) Production Capacity (each):100 litres/day Raw Materials: used cooking oil, palm oil, jatropha oil TargetDec 2006: 70 Communities Production: 7,000 litres/day Replace diesel 2.3 M litres/yr

  23. Promotion of Biodiesel Utilization

  24. Promotion of Biodiesel Utilization Action Plan established

  25. CPO Surplus 2006+2007 2007 2008 2009 2010 2011 2012 Promotion of Biodiesel Utilization Demand /Supply CPO tons/yr Neighbors Domestic Plantation Demand Surplus to consumption (incl. export) CPO ส่วนเกินบริโภคปี 2549+2550 CPO Demand

  26. Strategy for Palm Oil Procurement for Biodiesel Production Forecast of Demand and Supplythat is believed to be practical and 5 options for palm oil procurement for biodiesel production. Ton/yr * CPO Surplus to consumption = Actual Palm Oil Product + Stock at the beginning of the year – Domestic Consumption (excl. export)

  27. Promotion of Biodiesel Utilization Promotional Measures Monitoring Agency • Allocate money from the ENCON Fund (increase the contribution rate by 6 Satangs/litre) to promote RE of all types. • Set incentive measures for farmers to grow oil palm instead of rubber trees and increase the palm yield from 2.7 to 3.5 tons/rai. • 3. Promote oil palm plantation in neighboring countries by giving assistance in seeking sources of fund. • Provide soft loans, totaling 1,200 MBt, to investors of commercial-scale biodiesel plants. • Provide 100 MBt to be the operating budget for “One District, One Biodiesel” Project, totaling 730 stations. MOEN MOAC MOAC/MOENFinancial Institutions (FI) MOEN/FI MOEN/MOST/MOI/ Local Admin. Org.

  28. Measure 1.3 : Improve energy efficiency of the country • Transport Sector • Restructure the logistic system of the country • Improve & promote the use of mass transit systems • Industrial/Commercial/Service Sector • Use pricing measures and legally mandatory measures, e.g. issuance of energy efficiency standards to improve energy efficiency of the production process in the industrial sector, together with the application of incentive measures • General Public Sector • Foster energy conservation awareness • Use pricing measures together with legal measures

  29. 2nd Strategy: To Enhance the National Energy Security Measures: 2.1 : Manage the production of key energy types to ensure greater efficient fuel diversification 2.2 : Increase and promote exploration of energy resources overseas 2.3 : Seek for international cooperation in energy development, at both bilateral and multilateral levels 2.4 : Speed up study on nuclear fuel to be prepared for its application in the long term

  30. Measure 2.1: Manage key energy production for greater efficient fuel diversification Key Energy Management: Power

  31. Key Energy Management: Power Revised Load Forecast: Growth rate decreased from initial forecast MW (43,558 MW) 6.4 6.5 6.4 5.5 6.5 5.5 • Load forecast has been revised due to the economic slowdown. • Power demand growth rate is adjusted downwards from initially forecasted. • 2011 2016 • 2,507 MW5,317 MW (38,241 MW) 6.5 5.5 5.5 6.5 GDP 6.6 5.5 6.4 5.0 6.4 5.0 6.5 5.0 New GDP 6.5 5.5 6.5 5.5 5.0 4.7 Yr

  32. Key Energy Management: Power Fuel Option in Power Generation GWh 3% Others Imported Coal Lignite Others 3% 29% Fuel Oil 20% Imported Coal Natural Gas (LNG, Pipe Gas) 5% Lignite 6% 7% Natural Gas (LNG, Pipe Gas) 18% 10% 12% 17% 8% 31% 48% 72% Natural Gas 68% 14% Hydro Yr 7% 10% 6% 07 06 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21

  33. Key Energy Management: Power Ft will not increase until Jan 07 • Implementing Guidelines • Energy conservation measures help slowdown the power demand growth rate to 4% • Increase the use of natural gas from: • - Phu Hom basin to fuel Nam Phong Plant in Oct 2006, reducing the use of fuel oil by 60 M litres/month. • - Gulf of Thailand/Myanmar • Accelerate the use of coal at the IPP plant, BLCP, reducing the use of fuel oil by 110 M litres/month. x

  34. Key Energy Management: Power Road Map • Reduce the use of fuel oil/diesel so as not to affect the Ft. • Diversify fuel types in power generation, via: 2.1 Import coal in 2013, starting with power generating capacity at 700 MW. 2.2 Import hydropower from neighboring countries, by encouraging EGAT/Thai investors to invest in hydropower projects in those countries. • Lao PDR2,200 MW, during 2011-2015 • Myanmar3,000 MW, during 2013-2021 (1st project is Hutgyi) • PR China3,000 MW, during 2016-2017

  35. Key Energy Management: Power INDIA 3,000 MW (2016-17) PR China Myanmar 6,100 MW (2013-21 = 3,000 MW) Vietnam LPDR ลาว 4,050 MW (2011-15 = 2,200 MW) Hutgyi Thailand Cambodia Hydropower from neighboring countries MALAYSIA

  36. Key Energy Management: Power Unit: M Baht Year EGAT’s Long-Term Capital Investment Generation Transmission Total 2006 10,193 7,777 17,970 2007 22,375 8,328 30,703 2008 36,785 9,185 45,970 2009 40,163 19,297 59,460 39,024 22,346 61,370 2010 Total 148,540 66,933 215,473 Estimation of EGAT’s Long-Term Capital Investment

  37. Measure 2.1: Manage key energy production for greater efficient fuel diversification Key Energy Management: Natural Gas

  38. Key Energy Management: Natural Gas CAGR 4% 7,350 5,015 3,145 13% 17% 20% 20% 7% 15% 10% 9% 52% 74% 62% Plan of Natural Gas Demand Showing Continuous Growth Unit: MMSCFD • Growth Rate Increases: • Short term (2006-2010) 12% • Long term (2011-2020) 4% • Expand the market that optimizes the value creation of natural gas: • Industries (CHP)/Transport (NGV) • Gas Separation Plants/ Petrochemical GDP Growth 5.5% GDP Growth 5.2% GSP CAGR 12% NGV Industry NEW IPP (Gas 70%) EGAT / IPP / SPP 2006 2008 2010 2012 2015 2026 2028 2030 Source: PTT/ EPPO/ Draft PDP 2006

  39. Key Energy Management: Natural Gas 915 9% 15% 20% Plan for Value Creation in the Industrial Sector Expansion of Efficient Use of Natural Gas via the Use of Combined Heat & Power (CHP) Energy Demand in the Industrial Sectorby Fuel Type Unit: KBD Projects in progress 297 MW • Suvannabhumi Airport (2006) 52 MW • PTTUT 1-2 (2008-09) 225 MW • Government Office Centre (2008) 10 MW • Future Park Rangsit (2007) 5 MW • Energy Complex (2009) 5 MW Projects under FS 720 MW • PTTUT 3-4 225 MW • Sahaviriya Steel Factory 220 MW • Samui Island 100 MW • Eastern Seaboard Industrial 150 MW Estates • Bangchak Oil Refinery 20 MW • Siriraj Hospital 5 MW High Potential (25 projects) 259 MW CAGR 5% 22% Renewable 21% 416 22% Electricity 26% 21% 21% Coal/Lignite 21% 26% 11% 29% Oil 17% 19% Natural Gas (CAGR 10%) 2005 2008 2011 2014 2017 2020

  40. Key Energy Management: Natural Gas Plan for Expansion of Distribution Pipeline System to Promote Use of Natural Gas in the Industrial & Transport Sectors • Expand City Gas • Suvannabhumi – Suksawad - Siriraj • Sai Noi – Suksawad - Siriraj • Samut Prakarn – Bang Chak • Expand to Regional Estates/Industrial Areas • Central Region • Ayuddhaya (Nakhon Luang district) • Samut Sakhon (Kratumbaen district) • Prachinburi (Gateway Estate, Sahapattana Group) • Eastern Region • Rayong (TPI) • Western Region • Ratchaburi (Ratchaburi Industrial Estate) • Southern Region • Songkhla (Chalung Industrial Estate)

  41. Key Energy Management: Natural Gas CAGR 8% 2,296 4,524 3,627 5,317 2,450 2,450 3,680 932 Plan for Value Creation in the Petrochemical Industry/LPG Export GSP Expansion Unit: MMSCFD GSP 7+8 (Ethane Extraction) 1,465 GSP 7 (LPG Only) • Increase gas separation capacity to accommodate the petrochemical industry development GSP 6/ Ethane Plant GSP 7+8 Ethane Plant • GSP 6 GSP 7&8 • & Ethane Plant • 2009 2012-14 3rd Wave 3rd Wave Phase 1 Phase 2 Value added (Billion Baht) 42.5 47.3 Value of investment • Billion USD 2.8 2.4 • Billion Baht* 110.8 96.9 Revenue Estimate: 288 Billion Baht/yr @ 2018 GSP 6 491 GSP 1-5 2005 2008 2011 2014 2017 2020 LPG/Ethane Production Unit: K Ton/Yr LPG Ethane Remarks: * Exchange Rate at 40 Baht : 1 USD 2006 2010 2012 2015

  42. Key Energy Management: Natural Gas Plan for Natural Gas Supply: Short-Term Natural Gas from the Gulf of Thailand (2,213 MMSCFD) until the capacity of the offshore Pipeline No. 3 is used up. Unocal Add FPSO FPSO S. BKT A18 Phase 3 Jul 2007 Yetagun Add Reduce Border Pressure @ Myanmar Phuhom Arthit Add B17 A18 Early Gas 330 (Oct) A18 Reduce Pressure @ ERP/ECP 250 (Jul) Arthit 150 (Jan) 100 (Jul) Unocal Add & Pipeline No. 3 (270+60) (Jul) 60 (Jan) +200 (Apr) 330 (Jan) Unocal Add 200 (Jun) 70 (Aug/Sep) หน่วย : ล้าน ลบ.ฟุต/วัน 108 (Oct) 20 (Sep) 65 (Sep) Plan for NG Supply 100 (Jun) LNG/Regional Gas 30% 4% Use of FPSO to speed up increase of NG supply from the Gulf of Thailand (Arthit/B17) M7/M9 6% 5% Now Myanmar 21% 12% 3,150 28% Gulf of Thailand 52% 70% 72% Jun 2006 2007 2008 2009 2010

  43. Key Energy Management: Natural Gas Plan for Natural Gas Supply: Medium/Long Term • LNG/Regional Gas to meet the increasing demand (starting 2011) MMSCFD • LNG (5-10 MTA) 700-1,400 • Middle East (Iran/Qatar) • Malaysia • Australia (Woodside) • Russia (Sakhalin) • Regional Gas • M7/M9 /A1/ 600 Other Myanmar • Natuna 1,000 • Additional Gulf to replace decreasing NG in the Gulf of Thailand (starting 2022) • Arthit 3 110 • Pailin add 132 • Thailand-Cambodia 1,000 Overlapping Area

  44. Key Energy Management: Natural Gas Plan for the Expansion of Natural Gas Pipeline Networks Expansion of Domestic NG Pipeline Networks • (MMSCFD) • East CoastYear 2011 • Offshore 2,010 3,910 • Onshore 1,200 3,700 West Coast • Onshore 1,265 1,760 Distance 3,000 4,400 km Expansion of Cross-Border NG Pipeline Networks • Accommodate domestic demand in the long term • Preparedness to be “Gas Hub” • Natuna (Indonesia) 1,600 km • A1, M7/M9 (Myanmar) 1,200km • OCA (Thailand-Cambodia Overlapping Area)

  45. Key Energy Management: Natural Gas Project on the LNG Receiving Terminal • Location: Map Ta Phut Industrial Estate (MapTa Phut Industrial Port, Phase 2) • Capacity: - Initial phase 5 M Tons/year (700 MMSCFD) as at 2011 - Long Term 10 M Tons/year (1,400 MMSCFD) as at 2018 • Lining of Onshore Pipeline No. 4 (42”), 1,300 km, linking with the Terminal and the existing pipeline system/New IPPs • Value creation from the cool of LNG • GSP 7 and 8 • Power Plants/Petrochemical Industry Project Site: Map Ta Phut Industrial Port, Phase 2

  46. Key Energy Management: Natural Gas Investment in energy & petrochemical industries is increasing continuously. Unit: M Baht Investment in the next 5 yrs 2007 2006 PTT PTT Subsidiaries Others 2,310 ธุรกิจ อื่นๆ OIL ธุรกิจ อื่นๆ OIL โรงแยก ก๊าซฯ 1% 12,961 โรงแยก ก๊าซฯ 12,961 PTTEP JV 222,726 2% 4% JV 142,280 GAS 69,349 24% 37% NGV JV 23% 222,726 Refining Pipeline System GAS Petchem 89,560 NGV 137,080 72% ระบบท่อฯ 15% 22% Gas 65% Gas 79% 64,142 307,346 79,620 604,607

  47. Measure 2.2: Increase and promote exploration of energy resources overseas • Encourage “National Champions” in both petroleum and electricity generation industries to invest or joint venture in energy development projects in foreign countries.

  48. Measure 2.3: Seek for international cooperation in energy development, at both bilateral and multilateral levels • Speed up energy cooperation projects to enhance energy supply for Thailand, through the bilateral discussion framework with neighboring countries. • Seek for cooperation in the energy technology development, via the multi-lateral discussion framework, and forge ahead Thailand’s energy policies in international forums.

  49. Measure 2.4: Speed up study on nuclear fuel to be prepared for its application in the long term • Seek cooperation with countries with expertise in nuclear technology • Human resources development to accommodate future nuclear projects

  50. 3rd Strategy: To Ensure that Energy Development is Gearing towards Sustainable Development Measures: 3.1 : Promote participation of the general public in energy development projects 3.2 : Improve and promote the protection against, and the management/control/alleviation of pollutions resulting from energy development activities

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