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Thailand is going on an LNG shopping spree

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LNG Industry,

Bloomberg are reporting that Thailand is going on an LNG shopping spree.

Thailand is signing new contracts for LNG purchases and expanding terminals to boost imports to replace flagging domestic production. Thailand will boost LNG imports by more than 70% this year.

Producers of the fuel are expected to expand output by about 23 million t this year even as spot prices for LNG in Asia have fallen more than 60% the past three years and demand from traditional buyers in Japan and South Korea stagnates. Thailand’s PTT, which will boost imports to 5 million t this year from 2.9 million in 2016, is also considering investing in upstream projects as a way to maintain the country’s security of supply.

Spot prices for LNG cargoes in Northeast Asia fell 5.1% this week to US$5.55 per million British thermal units. That compares with US$15.80 during the same period three years ago.

For years, Thailand’s growing economy was fuelled by rising natural gas production from wells in the southern Gulf of Thailand. Now output from fields like Bongkot and Erawan is dropping. Production in January was 12% below peak output in November 2012.

To bridge the gap, PTT buys pipeline gas imports from Myanmar and in 2011 opened its first LNG import terminal near Rayong southeast of Bangkok. A project to double its size to be able to handle 10 million tpy will be complete before this summer. Another planned expansion will take the capacity to 11.5 million by 2019, and PTT plans to open a second terminal near Rayong to add another 7.5 million to import capacity by 2022.

PTT, the only company with a license to import LNG to Thailand, signed a contract in 2012 to import 2 million tpy from Qatar. It signed three other contracts in the past year with BP Plc, Royal Dutch Shell Plc and Petroliam Nasional Bhd of Malaysia, adding another 3.2 million tpy of supply. PTT also buys cargoes on the spot market and is interested in signing medium-term deals.

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