The oil & gas equipment market in Thailand remains attractive due to an increase in demand for primary energy and petroleum products; however, the oil and gas industry will be affected by the changing environmental policy over the next few years. As the government places more emphasis on renewable and alternative energy, companies will diversify their businesses to encompass these new technologies. Additionally, the Thai government is striving to become less dependent on imports of natural gas and oil, making domestic production more attractive.
US companies looking to operate in Thailand should strive to involve the surrounding communities in their decisions and to help enhance their lifestyles, especially after the Map Ta Phut pollution crisis of the past few years. Attractive markets for US companies will include green energy technologies and clean oil & gas technologies, exploration and production technologies, and services and expertise for the petrochemical market.
The domestic commercial energy consumption within Thailand is primarily based on oil and natural gas. 37% of this demand is met through oil, and 44% through natural gas. 84% of the oil is imported from the Middle East, and 20% of the natural gas is imported from Myanmar. Domestic petroleum production in Thailand currently comprises 44% of the country’s total demand for energy. In order to reduce reliance on imported energy, the Thai government is heavily promoting renewable and alternative energies.
2010 saw an increase in total primary energy, or energy that exists in a natural form before being converted to its end-use form, demand of 7.3% to an equivalent of 1.785 Kilo Barrels Per Day (KBD) of crude oil from 2009. Import volume of crude oil decreased by 0.1%, although its value actually increased because of high import prices.
As 81% of energy demand comes from oil and natural gas, this represents an opportunity for the continued importance of petroleum-related technologies and services. Renewable energies and alternative energies will play greater role in power generation for Thailand. However, these technologies will not completely replace the traditional petroleum industry, and the technologies used in generating power from these sources remains largely untried.
According to the Thai Power Development Plan (PDP) for 2010-2030, the forecasted GDP growth percentage for Thai power demand over the next 20 years will range from 3.58-4.28% per year. The PDP also provides a breakdown of future projections of generating capacity classified by fuel types through 2030. These projections indicate a shift in the types of fuels used to generate power in Thailand over the next 20 years. In 2011, natural gas has the capacity to provide 65.8% of the power generated in Thailand. By 2030, this percentage is expected to decrease to 24.8% as Thailand utilizes diversifying sources of power and as power needs increase.
In 2010, the demand for petroleum products increased by 2.6% to 708 KBD over 2009 levels. Diesel fuels, LPG, and gasoline comprised a total of 81.6% of this demand, with the remainder coming from jet petroleum, fuel oil, and kerosene. Natural gas vehicles (NGV) have become increasingly popular in Thailand, resulting in a replacement of oil consumption of 6.9%.
The following products are examples of equipment imported by Thailand for the oil & gas industry. The products are labeled under the Harmonization System of tariff nomenclature.
Product classifications under the Harmonization System Codes
9026 Instruments and apparatus for measuring or checking the flow, level, pressure or other variables of liquids or gases (for example, flow meters, level gauges, manometers, heat meters), excluding instruments and apparatus of heading No. 90.14, 90.15, 90.28 or 90.32.
8430 Other moving, grading, levelling, scraping, excavating, tamping, compacting, extracting or boring machinery, for earth, minerals or ores; pile-drivers and pile-extractors; snow-ploughs and snow- blowers.
8481 Taps, cocks, valves and similar appliances for pipes, boiler shells, tanks, vats or the like, including pressure-reducing valves and thermostatically controlled valves.
8413 Pumps for liquid, whether or not fitted with a measuring device; liquid elevators.
7304 Tubes, pipes and hollow profiles, seamless, of iron (other than cast iron) or steel.
As Thailand’s current energy policy focuses heavily on renewable and alternative energy sources, clean technologies are becoming more important in the marketplace, in addition to traditional oil & gas equipment and services. Technological equipment for the following applications have high potential.
Carbon Capture and Storage (CCS) – The Asian Development Bank listed CCS as one of the clean technologies to be pursued in its 2009 Energy Policy. In Southeast Asia, this is particularly applicable, as the greenhouse gas emissions in the region are increasing twice as quickly as the rest of the globe. In Thailand, high levels of natural gas production also result in high levels of carbon dioxide production. CCS technology has the potential to mitigate the production of carbon dioxide by injecting the gas back into underground reservoirs and petroleum formations.
Gasohol – Gasohol, a blend of gasoline and ethanol, has seen increased usage in Thailand since 2008, driven by volatile oil prices. The ratio of ethanol to gas in gasohol has also increased. However, when the price of ethanol is higher priced than 95 Research Octane Number gasoline, blending ethanol into gasoline becomes a cost. At times over the past few years, the price of ethanol has actually been higher, making gasohol more expensive to produce than a pure gasoline base.
Biodiesel – The Ministry of Energy (MOEN) has been striving to raise the compulsory biodiesel content by one to two percent, depending on the availability of palm oil in Thailand. The deadline to switch from B3 (3% B100) biodiesel to B5 (5% B100) biodiesel was continuously delayed due to a shortage of palm oil in 2011, and MOEN actually reduced the compulsory mixture of B100 diesel from B3 to B2 (2% B100). In addition to clean technologies, technology and equipment for accessing the natural gas and oil deposits in the Andaman Sea will continue to play an important role in this market, as many companies continue to explore and produce in this area.
Exploration & production – The remaining hydrocarbon deposits in Thailand are likely located in the Andaman Sea, where deep water (1 km) increases the cost of drilling and exploration. Technologies and expertise to access these deposits will prove valuable for companies looking to drill in this area. Best prospects for exporters of oil & gas equipment and services include the projects on which that these companies are working, as they will require different types of equipment and services depending on the nature of the project.