National Energy Policy Committee (NEPC)’s resolution on July 31, 2017 has assigned EGAT to get prepared to enter LNG market by 2018 as a new shipper importing 1.5 million tons of LNG per year, which will fuel EGAT power plants. This is EGAT’s new mission in fuel supply market to strengthen power system stability. EGAT has been allowed to hire an LNG terminal owned by PTT PCL. to support LNG import with details as follows:
What is the progression of EGAT’s LNG supply?
EGAT received the letter No. PTTLNG (B) 147/60 dated October 31, 2017 from PTTLNG Company Limited informing the approval to import LNG with the amount of 1.5 million tons per year for 38 years. The contract will start in January 2019 and end in 2056 to import LNG to supply EGAT South Bangkok Power Plant, Bang Pakong Power Plant, and Wang Noi Power Plant.
However, the NEPC’s resolution approving EGAT to supply LNG is a pilot project to assess pipeline market liberalization with Third Parties’ Access regime (TPA). EGAT will use PTT’s natural gas pipeline system and LNG terminal at Map Ta Phut in Rayong Province. For the 1.5 million tons of LNG EGAT has been allowed to import, EGAT needs to manage all processes starting from the decision for imported amount, import process, terminal use, and EGAT’s power plants fueled by LNG. It is a challenging mission as it is the first time EGAT enters LNG supply business.
Where will EGAT import LNG from, and when will the pilot period end to fully liberate the pipeline market?
EGAT is now working with the consultant to study which sources of LNG will be most suitable for the import with the consideration on 4 aspects namely competitive price, security, flexibility, and risk management. EGAT will not solely depend on a single LNG source.
For the pilot project, Energy Policy and Planning Office (OPPO) has proposed to NEPC that during the pilot period, there are 2 main shippers namely PTT and EGAT to import LNG and test TPA system in which there is more than one shipper. Moreover, EGAT has to separate the LNG supply unit from the generation unit. When the TPA system is stable in both of control and operation aspects, it will enter the second phase which will be more liberalized.
Will EGAT’s LNG import to fuel EGAT power plants affect the electricity bill?
As a matter of fact, the imported LNG is costlier than the natural gas from the Gulf of Thailand. But as the natural gas in the Gulf of Thailand is depleting, the replacement with imported LNG is necessary, which contributes to the higher electricity price. EGAT needs to have the strategy to import LNG from the sources with competitive price.
What are the challenges of this new mission?
As LNG import is EGAT’s new mission to enter the complex and fluctuating international market, EGAT needs to develop human resources to be knowledgeable about LNG market.
This is the challenging mission to which EGAT is committed. Having been assigned to enter this business means that EGAT has been trusted by the policy makers and the Government. To reach the achievement, the support from all sectors are required including EGAT executives, while EGAT officials need to develop skills and knowledge.