Thailand’s dependence on gas is coming under renewed scrutiny as rising costs and global disruptions expose economic and environmental risks embedded in its power system.
The tiny fishing hamlet on a stretch of land that juts into the Gulf of Thailand looks just like countless others that dot the country’s coastline.
It has the brightly coloured boats, the packs of street dogs and the delicate waves lapping onto the sands.
But this one, in Rayong province south-east of Bangkok, has a unique perspective. It stares straight into the heart of Thailand’s largest industrial gas complex.
Map Ta Phut, one of Southeast Asia’s biggest petrochemical hubs, dominates a vast coastal area here.
Within the country’s Eastern Economic Corridor (EEC), a special economic zone, it handles a significant share of Thailand’s energy imports, gas processing and petrochemical production.
It depends heavily on pipeline natural gas and imported liquefied natural gas (LNG), much of which is tied to global supply routes, including shipments through the Strait of Hormuz, now disrupted by the Iran conflict.
Map Ta Phut has permanently altered the coastal views here, and its waters and air. It has also irrevocably shaped the country’s power system, now at the frontline of a global energy shock.
Thailand is one of the most gas-dependent power systems in Asia. Gas generates roughly 55 to 60 per cent of the country’s electricity and is also widely used as a petrochemical feedstock.
Thailand’s reliance on gas is being tested on two fronts at once. As geopolitical tensions disrupt global supply and push up prices, the cost of keeping the country powered is rising sharply.
Gas is no longer the cheap “bridge fuel” it once was. LNG prices have roughly doubled during the latest Middle East tensions.
At the same time, recent expert analysis suggests that the very system driving those costs is also contributing significantly to air pollution, especially in the densely populated areas where most gas infrastructure is located – around Bangkok and the EEC.
Together, they expose a deeper problem: a fuel that is neither as cheap nor as clean as once believed, experts told CNA.
The Middle Eastern crisis has revealed short-term price shocks and long-term risks embedded in its decades of energy planning that increasingly pivoted towards gas, said Tara Buakamsri, an independent energy policy advocate.
“It has become a perfect storm for the energy system here in Thailand,” he said.
One immediate outcome for households will be increased electricity prices. Last week, the Energy Regulatory Commission approved a new average electricity tariff of 3.95 baht per kilowatt-hour for the May-August billing cycle, up from the current 3.88 baht.
Up to the start of April from the onset of the Iran conflict, the Electricity Generating Authority of Thailand (EGAT) had absorbed close to 36 billion baht (US$1.1 billion) on behalf of the public.
Even though only about 6 to 7 per cent of Thailand’s gas supply is coming through the Strait of Hormuz, the government is scrambling to secure fuel with its predominant LNG source market Qatar currently impacted, said Raksit Pattanapitoon, a senior analyst for Rystad Energy.
Nearly two-thirds of Thailand’s gas comes from its domestic supply, with about 9 per cent pipelined from Myanmar. The rest is LNG from multiple sources including Qatar, Australia, the United States and Malaysia.
“It’s not too bad at the moment, but we’re still using a lot of gas, and a lot of it is coming from LNG,” he said.
Thai officials and executives from state-owned PTT, the country’s largest energy company, held talks in March with a US LNG producer, Cheniere Energy, to increase long-term supply and accelerate deliveries, with the aim of mitigating disruptions due to the ongoing war.
“Thailand will be able to navigate this crisis together,” Energy Minister Atthapol Rerkpiboon said at the time.
Meanwhile, the EGAT set up a “war room” to monitor the Iran conflict’s impact on energy supply, while the government’s other measures included reviewing oil exports and increasing national oil reserves.
FROM ABUNDANCE TO DEPENDENCE
In the 1980s, Thailand was riding on a wave of offshore gas discovery.
After energy shocks during the previous decade, its unearthed domestic resources allowed the country to build its own energy base and reduce reliance on imported oil.
As it pushed away from coal, natural gas became the backbone of its power system. Gas infrastructure was rolled out at scale, embedding the resource at the centre of both electricity generation and industrial growth.
Yet even as domestic gas supply declined in more recent years, the country has doubled down, building out pipelines, power plants and LNG terminals, and signing long-term contracts to secure supply.
Though renewable energy sources like solar and wind gained global traction, the government showed few signs of pivoting significantly away from what had proven to be a cheap and reliable energy source, Raksit said.
The cost of this dependence is becoming increasingly visible, according to Daniel Nesan, a Southeast Asia analyst at the Centre for Research on Energy and Clean Air (CREA).
During the current crisis, Thailand has become more exposed not only to global price swings, but also to the economic burden of maintaining vast gas infrastructure even when it is underused, he said.
“Now they’re a bit stuck. They have all these gas plants, but they don’t have the gas to run them.”
Yet because of its vast investments, Thailand is somewhat locked into its gas pathway, experts said, even if it is looking expensive and unreliable.
Gas looks set to remain the primary source of energy going forward. But the country does have options, should it choose to take them, Raksit said.
“The most logical next step for Thailand is to ramp up renewable capacity addition as fast as it can,” he said, even though some existing infrastructure might suffer from lower utilisation.
“And yes, everyone will still need to be paying for that. But there is no argument for us to build any more gas capacity than what is already done.”
Thailand’s long-awaited new power development plan remains delayed, with final approval tied up in political transition following the national election in February and ongoing revisions.
It is expected to shape the country’s energy mix for the next few decades.
Thailand’s draft power plan aims to more than double renewable energy from around 20 per cent of electricity generation today to 51 per cent by 2037.
Manun said an expectation from environmental groups is a shift to 70 per cent renewables, in order for the country to make good on pledges to decarbonise its economy and reach net zero carbon emissions by 2050.
But long-term contracts with gas operators mean she sees “very little grid capacity left” to support more solar energy, despite Thailand’s potential.
Thailand’s power-sector emissions have nearly doubled since 2000 as gas generation met rising demand, according to Ember, a global energy think tank.
Tara said he does not expect major changes to the way Thailand’s economy will be powered in the years to come.
“Gas has become the king of energy in Thailand. I think it will stay. The energy shock might not shift the throne,” he said.
While Raksit anticipates more renewables will enter the mix, he agreed that Thailand can afford to push harder in the green energy space.
“My argument would be, we can actually afford to be even more ambitious, given the situation in the Middle East. It’s a good opportunity to make the argument that relying on other countries in this fragmented world is leaving you vulnerable in terms of energy security and resiliency,” he said.
“(But Thailand is) pushing the narrative around gas being a destination fuel, meaning that it will play an entrenched role in the energy mix in the future.”
EGAT has maintained that natural gas and LNG are “essential” for the energy transition to provide stability and grid balance alongside renewables.
Across Southeast Asia, Thailand is not the only country facing challenges around its gas reliance. Malaysia is also gas-heavy but has vast domestic resources, as does Indonesia, the region’s largest gas supplier.
Singapore is the region’s second-largest gas importer, with about 45 per cent of its LNG from Qatar. The Philippines has been rapidly adopting LNG, constructing four new terminals to import gas as its own domestic fields deplete.
For energy affordability, and even security, the long-term solutions for these economies will be more renewables, Raksit said, even though different countries would naturally move at different paces with unique considerations about their energy mix.
“Maxing out your pace of renewable deployment domestically is the very obvious low-hanging fruit,” he said.
And beyond cost, there are growing concerns about the environmental impact of gas close to Thailand’s urban population.
Source : https://www.channelnewsasia.com/asia/thailand-lng-gas-energy-prices-air-pollution-6043386
