Key View

• Thailand’s gas power sector is already facing downward pressures from strained import supply from Myanmar with developments in the Yadana gas fields.
• Domestic gas supply has dipped, exposing Thailand’s gas power sector to more international gas imports and leaving the power market more vulnerable to supply challenges.
• In order to ensure a steady electricity supply, we expect Thailand to strengthen its renewables sector alongside expanding electricity imports.

Thailand’s gas power sector is already facing downward pressures from strained import supply from Myanmar with developments in the Yadana gas fields. Myanmar’s evolving political situation and civil unrest have severely waned investor interest in the market. It has also prompted international companies in the market to halt operations and pull out of the market altogether. Prominently, major oil giant Total has officially undertaken proceedings to exit from the Yadana gas field, while Chevron is reviewing plans for exiting the market. Following these developments, PTTEP announced that it will take over as Yadana’s operator. This will put a strain on PTTEP’s resources to maintain a steady supply of natural gas back to Thailand. Apart from a majority stake in the Yadana gas field, PTTEP has an 80% share in the Zawtika gas field as well. Both Yadana and Zawtika contribute to 11% and 6% of Thailand's natural gas respectively (only including domestic production and piped natural gas imports). With these developments in Myanmar, Thailand’s major supplier of natural gas, we expect downside risks to Thailand’s gas supply, and consequently gas power generation.

Domestic gas supply has also dipped, exposing Thailand’s gas power sector to more international gas imports and leaving the power market more vulnerable to supply challenges. In April 2022, PTTEP took over operations of the Erawan gas field in Thailand, after outbidding Chevron in 2019. The handing over means that PTTEP will face further strain in resources to operate domestic gas fields on top of the ones they are operating in Myanmar. Notably, gas production from the Erawan gas field dropped by more than 50% when comparing February 2022’s level to that of February 2021. From January to March 2022, the market has increased purchases of liquified natural gas (LNG) by 3.0%, when compared to the same months in 2021. This is also in line with the trend witnessed over the past few years (reflected in the chart above). A dipping domestic gas supply coupled with increasing exposure to the surging gas prices in the international market will present further challenges to Thailand’s gas power sector’s ability to obtain affordable and steady supplies of natural gas for electricity generation. Additionally, with new gas power capacity expected to come online, such as the two 2,650MW natural gas power plants by Gulf Energy in 2022 and 2025, the demand for natural gas will only increase. If the demand from the gas power sector is unmet, Thailand will need to tap into other power sectors to ensure the electricity supply matches the growing expected demand. At the moment, we forecast gas to remain the main power generation type in Thailand, growing from 113.9TWh in end-2021 to 138.5TWh in 2031 at an annual average rate of 2.0%.

In order to ensure a steady electricity supply, we expect Thailand to strengthen its renewables sector alongside expanding electricity imports. Thailand has been a strong performer of renewables growth in Asia, supported heavily by its solar, and biomass and waste-to-energy power sectors. We expect this trend to continue, with upward pressures from the developments in the gas power sector, as Thailand will seek to ensure electricity supply security. With advancements in floating solar farms and the Energy For All scheme, the latter of which will result in waste-to-energy plants starting operations in 2022. The government has also turned to electricity imports from Laos hydropower dams to serve an increasing power demand. In March 2022, it was reported by the Bangkok Post that developers and operators of four hydropower dams in Laos are in discussions with Thailand’s energy policymakers to sign electricity import deals in May 2022. Once signed, the power purchase agreement will boost electricity imports from 9.0GW, from an existing memorandum of understanding signed in 2016, to 10.5GW. As a result, we also expect upside risks to our net imports forecast for Thailand, which is already elevated.