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Yadana gas delay cuts power cost

Yadana gas delay cuts power cost
DELAYS in the delivery of natural gas from Burma have unexpectedly benefitted
Thai electricity consumers, due to the higher price of the Burmese gas
with domestic sources, Piyasvasti Amranand, secretary-general of the National
Energy Policy Office (Nepo), says. 
According to Piyasvasti, the pricing formula of the Burmese Yadana gas field
fixed the gas price at US$3 per million British Thermal Units (BTUs) for the
first 15-month period of the contract, due to end in October, before being
pegged in line with fuel oil prices during the remainder of the 25-year
contractual period. 
Due to the economic crisis, oil prices have tumbled and this has been
translated into a reduction in the price of gas produced from domestic
This is now about $2 per million BTUs. 
This lower gas price was a major factor in the reduction of electricity
announced on March 30 as part of the government's economic stimulus measures. 
''In a way, we're lucky [with the delay in utilising the Burmese gas],'' said
the Nepo chief. 
The physical delivery of Yadana gas has been held up by delays in the
construction of the Ratchaburi power plant, which will be the only consumer of
the gas until the Yadana-Ratchaburi gas pipeline is connected to the national
gas transmission grid. 
The Electricity Generating Authority of Thailand (Egat) has blamed its
contractor -- Mitsui & Co -- for the power plant's construction delay. Mitsui
in turn has blamed its equipment supplier -- General Electric -- for the

Koomchoak Biyaem, Egat's assistant governor for policy and planning, said that
following several postponements, the first two gas turbine units of the
Ratchaburi plant were now scheduled to commence production in June, with a
total capacity of 460 megawatts, followed by a further 460 MW coming on stream
in October. 
Despite the current benefits from the delay in the delivery of the Yadana gas,
industry sources warned that Thai consumers in the end could not avoid the
impact of the higher-priced Burmese gas, since the gas supply contract is on a
''take-or-pay'' basis. This means that the Petroleum Authority of Thailand
(PTT) is obliged to pay for the gas at the agreed price, regardless of when
deliveries start. 

However, considering Egat's electricity oversupply problem and the absence
of a
supply contract between the agency and PTT, the delay might benefit Egat while
hitting the PTT. 
Nevertheless, the PTT, which is responsible for the supply of the Burmese gas
to the Ratchaburi plant, is negotiating with the Yadana gas developers and the
Burmese government for a review of the gas purchase contract in the aftermath
of the delay in the construction of the plant. 
Under the Yadana gas contract, the PTT has agreed to buy 525 million cubic
per day of gas from the project, which is developed by a consortium comprising
Unocal Corp of the United States, Total of France and PTT Exploration &
Production Plc. 
The Nation