BANGKOK -- Thailand's PTT Exploration & Production and its partners in a Mozambique liquefied natural gas processing plant have signed a 15-year agreement to sell LNG to a French power company.
It is the first time that the partners have secured a deal that will give them long-term revenue from the Mozambique Rovuma Offshore Area 1 project.
Processing is expected to begin soon.
Phongsthorn Thavisin, president and CEO of PTT Exploration & Production, said 1.2 million tons of Mozambique Rovuma Ofshore Area 1's annual production will be sold to Electricite de France. The integrated utiliy has contracted to buy LNG for 15 years.
"PTTEP endeavors to expedite the development of Mozambique Rovuma Offshore Area 1 as one of the world's leading greenfield projects," Phongsthorn said, "and to increase our petroleum reserves in the future."
In addition, Phongsthorn said, "the purchase agreement gives Mozambique LNG flexible access to the European market, one of our key strategic markets."
PTTEP's investment in the Mozambique project is part of a plan to help secure LNG for Thailand, which generates more than 60% of its electricity from gas.
Most of the LNG that Thailand converts into electricity comes from two major fields in the Gulf of Thailand, the Bongkot and Erawan blocks. Chevron Corp. operates the Erawan block and PTTEP handles the Bongkot block. Chevron's license expires in 2022, PTTEP's in 2023. The two blocks have a combined output of 2.2 billion cu. feet a day.
The fields, which have provided Thailand with power for more than 30 years, now face depletion. According to the Energy Policy and Planning Office, without further investment in the Erawan and Bongkot gas fields, Thailand risks a 6,300-megawatt electricity deficit in 2021.
PTTEP is considering investments similar to the one it has made in Mozambique, and success there could catapault it forward.
Initially, Mozambique's first onshore LNG development project will consist of two liquefaction and purification facilities, or LNG trains, with total nameplate capacity of 12.88 million tons a year. The plant will handle production from the offshore Golfinho/Atum fields.
PTTEP holds an 8.5% stake in the project. Anadarko Mozambique Area 1, the operator, holds 26.5%. Five other parties have stakes.
The Mozambique Rovuma Offshore Area 1 Project is off southeast Africa's coast. It consists of five fields that have a combined 75 trillion cu. feet of recoverable natural gas resources. The fields also form what could become one of the world's largest LNG supply hubs.
Elsewhere, PTTEP and its partners recently won rights to explore two petroleum blocks in the Gulf of Mexico; contracts should be signed by May.
PTTEP reported a net profit of $594 million in 2017, up 60% from $372 million the previous year. The sharp increase was primarily due to fewer depreciation, depletion and amortization expenses as well as cost-cutting.
PTTEP had been actively seeking overseas investment opportunities. Currently, 60% of its $18.6 billion worth of assets are in Thailand, 17% are in other Southeast Asian nations and 15% are in Africa.
Mexico is one of PTTEP's overseas focuses; the company is also looking for business opportunities in Southeast Asia and the Middle East.