Chevron could sell stake in Thai field

01 June 2016, Week 21 Issue 527

Chevron is reportedly mulling the sale of a 16% stake in the Arthit field offshore Thailand in the Malay Basin. The US super-major, which suffered a US$725 million first-quarter loss, is scrambling to divest assets in Asia to boost cash reserves.

Unnamed sources quoted by Bloomberg said the company had held initial talks to pass the stake to the upstream arm of Thailand’s PTT. PTT Exploration and Production (PTTEP) operates the permit with an 80% stake, while the remaining 4% share is held by the local subsidiary of Mitsui Oil Exploration. Chevron’s holding is valued at around US$500 million, Bloomberg said.

The California-based oil giant is pressing ahead with a US$10 billion divestment plan in the face of weak crude prices. In April, Reuters reported that Chevron was marketing its gas assets in Myanmar, including a stake in the Yadana and Sein fields. It is also seeking a buyer for an Indonesian oil and gas field as well as some geothermal energy blocks in Asia valued at US$3 billion, according to Reuters.

As of press time, the company has not commented on a potential sale of the Arthit field. Located around 230 km offshore of the southern Thai province of Songkhla, the field was brought on stream in early 2008.

A PTTEP spokeswoman refused to comment on Chevron’s asset, but noted that the company was eager to buy up fields in Thailand and elsewhere in Southeast Asia that are either already producing or about to start production. Presumably this is so the Thai company can access additional revenues immediately.

Backed up by a US$3.7 billion war chest, PTTEP wants to exploit the bearish market to pick up assets cheaply. This will help it reach its goal of raising output to 600,000 barrels of oil equivalent per day by 2020.

PTTEP’s executive vice president for finance, Pannalin Mahawongtikul, told reporters early last week that the company was interested in Chevron’s 28.3% share of Myanmar’s Yadana field. He added that the producer was intending to finalise at least one upstream acquisition in the region before year-end.

With Bangkok struggling to secure enough gas supplies to keep pace with future demand, the government has called on PTTEP to focus on domestic purchases.

Up for auction

Chevron, Thailand’s top oil and gas producer, may also end up eventually relinquishing its control of the Erawan field in the Gulf of Thailand.

Thai Energy Minister Anantaporn Kanjanarat said on May 30 that the government would auction off the asset together with PTTEP’s Bongkot field when the existing concessions expired in 2022-23. The auction would take place within a year, he said.

Earlier last week the energy minister said the government would put the fields on the block if it failed to agree a deal with their current owners to give Bangkok a greater share of profits. This, he said, would be in exchange for extending the fields’ contracts. Bangkok currently nets around 67% of pre-tax profits from production at the assets in taxes and royalties.

Edited by

Andrew Kemp

Editor

Any questions? Please get in touch