LU-Egat objects to LNG import delay


LU-Egat objects to LNG import delay

The Labour Union of Electricity Generating Authority of Thailand (LU-Egat) is calling for the Energy Ministry to reconsider a resolution from last Friday to put off Egat’s plan to import liquefied natural gas (LNG) for national power generation.

On Aug 30, the Energy Policy Administration Committee (Epac) decided to cancel the 1.5-million-tonne LNG purchase order made by Egat to Malaysia’s Petronas LNG.

Egat selected Petronas as the winning bidder for the purchase, but Epac froze Egat’s LNG plan on May 16.

Egat said there were concerns that once the massive LNG purchase is made, the fuel would likely not be used to generate power, leaving Egat to pay for LNG storage.

Epac allowed Egat to buy the LNG via spot purchases to test the local market. The LNG price on the spot market is cheaper than the price under the purchasing contract with Petronas.

Union chairman Sirichai Maingam said representatives from LU-Egat submitted an objection letter last Friday to Energy Minister Sontirat Sontijirawong, Epac’s chairman.

The union plans to submit the letter to Prime Minister Prayut Chan-o-cha, who is chairman of the National Energy Policy Council, to oppose the latest ruling.

“The changed policy means the government lacks consistency and transparency. Egat will suffer from this resolution,” Mr Sirichai said. “Moreover, this move will negatively impact bilateral relations with Malaysia, as Petronas is Malaysia’s national oil company.”

He said Petronas offered a lower price than other bidders, including PTT.

“There is no reason to put off the plan, because the low price of LNG means Thais will benefit from lower power tariffs,” Mr Sirichai said. “We question why the government does not open the LNG market to free competition. The LNG price in Thailand would be lower than what PTT is charging, as LNG producers lock in higher prices in their long-term purchase contracts with PTT.”

Last Friday, Epac said the LNG spot price stood at US$4-5 per million British thermal units, while the gas price in the Gulf of Thailand was at $7-7.50 per million BTUs.

Mr Sirichai said the spot market for commodity products will not have lower prices for the entirety of this year, unlike oil and agricultural products. He advised energy companies to strike a balance between long-term and spot contracts in order to handle vacillating prices.

LU-Egat is calling for 12,000 Egat employees nationwide to wear black tomorrow to express their objections.

Having received a licence to import LNG from the Energy Regulatory Commission, Egat will become the country’s second-ever LNG importer.

PTT has had a monopoly on LNG imports since 2011. The company operates two LNG receiving terminals in Rayong with a combined capacity of 19.5 million tonnes a year.

Mr Sontirat said the government is available to discuss and explain the latest decision on LNG imports to LU-Egat.

LNG imports are part of government measures to supplement national power generation, which is mostly run by Egat. Nearly 60% of the country’s power comes from natural gas, mostly extracted from the Gulf of Thailand.

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