Gas supplies dwindle as Japan buys

Since the March 11 earthquake and tsunami shut down nuclear plants, Japan has been buying other types of fuel, especially liquefied natural gas (LNG), from around the globe to substitute for nuclear energy, prompting concerns in other countries including Thailand about a possible shortage of fuels.

The most recent earthquakes in Japan caused the suspension of nuclear power output of 10,000 megawatts. Japanese operators now require a huge supply of LNG to replace nuclear energy. Last week the Electricity Generating Authority of Thailand agreed to help Japan by providing two gas turbine generators with a combined output of 244 MW.

However, Norkhun Sitthipong, the energy permanent secretary, yesterday said a global LNG shortage would have no major effect on Thailand, whose first LNG terminal will begin operating in Map Ta Phut soon.

Most global LNG producers are willing to feed most of their supply to Japan, which is ready to take up all supply at any cost. Producers are refusing to supply other countries including Thailand.

"We'll seek other suppliers. We should not see a shortage, but the price will likely spike," said Mr Norkhun.

He said the major concern is the abrupt jump in demand could trigger prices to shoot up further. The situation will not ease soon, as it may take several months for Japan's nuclear power plants to resume operations. They must comply with the International Atomic Energy Agency's safety regulations.

PTT Plc, Thailand's sole natural gas distributor, reported that the first four shipments of LNG will arrive at its receiving terminal in July. Test runs will be made soon.

It plans to import one million tonnes of LNG per year or equal to 140 million standard cubic feet per day (MMSCFD). Thailand consumes natural gas totalling 4,000 MMSCFD, with Burma supplying 1,100.

PTT plans to increase the volume of imported LNG to 5 million tonnes by 2015 and double the total to 10 million in 2021. As the sole importer, it is negotiating with suppliers for the most reasonable prices.

The Mineral Fuels Department will be asked to pump more natural gas from the Gulf of Thailand, while PTT Exploration and Production may start early production of natural gas from its Zawtika block in Burma.