One of the many challenges that oil and gas companies continue to face is meeting global energy demands while addressing climate change concerns. But Thailand’s national E&P company PTT Exploration and Production Public Company Limited (PTTEP) is determined to tackle global warming issues while providing affordable energy to the world, according to Montri Rawanchaikul, CEO of PTTEP.
In an exclusive interview with Oil & Gas Middle East, Rawanchaikul says that it is critical for Asian oil and gas companies to balance between three pillars: energy security, affordability, and sustainability.
“We believe that challenges in the energy sector are not as simple as other sectors,” he says over our Zoom interview. “To cope with challenges such as climate change as well as to sustain our business, we established a strategic framework with three strategies to become a winning oil and gas company during the energy transition namely to sustain our E&P business, to focus on decarbonisation, and to explore new businesses beyond E&P.”
Indeed, Thailand’s national exploration and production company is not keen to let go over either side of the rope. Rawanchaikul says there are three pillars that Asian oil and gas companies must build upon: energy security, affordability, and sustainability. He would rather focus on producing safely to meet demand for affordable energy supply without compromising sustainability.
Like many other oil producers, PTTEP has set an ambitious emissions reduction target, aiming for net zero greenhouse gas (GHG) emissions by 2050 using its EP Net Zero 2050 concept. The EP Net Zero 2050 concept focuses on E&P, the core of its business, with an aim to expand. The ‘E’ stands for ‘Exploring for lower carbon E&P portfolio,’ which will be managed to transform PTTEP into a lower-carbon organisation. The ‘P’ is for Production and Planet in Balance.
In essence, Rawanchaikul aims to emphasise natural gas projects when assessing future projects, and will factor in GHG emissions intensity in the investment decision-making process. In addition to this, PTTEP will continue to develop technologies to reduce GHG emissions, and to improve energy and production efficiency. That will include applying renewable energy into upstream operations, and offsetting by planting trees in forests and mangroves to increase natural carbon sinks.
“We don’t have any kind of energy to replace [gas] as of tomorrow, and it will not be an overnight sensation.”
Montri Rawanchaikul, CEO, PTTEP
Natural gas as a transition fuel
Natural gas has been hailed as a bridge fuel by analysts across the globe, who see its potential as a lower-carbon substitute for other traditional fossil fuels. But as evidenced by PTTEP’s EP Net Zero 2050 concept, gas is just one part of a wider plan.
Rawanchaikul stresses that while the energy transition has several components, a cleaner fossil fuel such as natural gas will play a “very important role” in the transition.
Over the past few years, natural gas has gained attention as a clean source of energy that has significant advantages over coal, emitting about half the CO2, and making it a reliable and affordable energy source. Additionally, PTTEP’s CEO notes that countries can continue producing gas economically in the longer term because the necessary infrastructure is already in place.
While the energy sector is actively exploring different forms of renewable energy like hydrogen, solar, and wind, Rawanchaikul says it’s critical to understand how these energy sources will replace the use of natural gas.
He notes that it’s important for countries to balance efforts into renewables while also producing more natural gas as a cleaner source of energy compared to traditional fossil fuels.
With more and more oil and gas companies pledging to achieve net zero targets, Rawanchaikul believes that using natural gas with CCS to achieve both security and sustainability is the most ideal choice the world can achieve its goal.
PTTEP advancing carbon capture and storage
While gas is a cleaner alternative to other fossil fuels, it is not a net zero fuel. That’s why companies like PTTEP are considering carbon capture and storage (CCS) as a high-potential technology to be used in combination with increased gas production.
CCS is capable of significantly reducing emissions compared to other technologies, several countries plan to use it as the key technology to support their decarbonisation ambitions. Rawanchaikul says that Thailand also sees the significance of CCS in the context of the nation’s wider decarbonisation goals.
Therefore, the company wants to grow its investments in decarbonisation technologies and is gearing up to develop the nation’s first CCS project.
In June 2022, PTTEP announced the development of Thailand’s first CCS project at Arthit offshore gas field in the Gulf of Thailand. The feasibility study has recently concluded, and the project is currently in the process of preliminary front-end engineering and design (Pre-FEED) study and is expected to commence CCS operations by 2026.
Rawanchaikul says the project marks the first initiative of its kind in the country, calling it the “perfect opportunity” to demonstrate that CCS is feasible for Thailand. “Gas cannot stay the same,” he says. “It has to be cleaner. Technology and collaboration among all of us are crucial.” Collaboration emerges as a key theme in our conversation across the value chain, and in this instance knowledge-sharing is in the spotlight.
PTTEP is working alongside Japan’s INPEX and JGC, which have experience in CCS technology, to evaluate the potential of CCS development in other parts of Thailand that will eventually provide support to other domestic industries in decarbonisation.
“We would like to be part of the technology, in-house or externally, and we are ready to invest with anyone who has a new type of technology for the transition of energy,” he says.
Rawanchaikul says his ultimate vision is making the country a “CCS hub,” adding that it requires massive investment and collaboration between industry players and policymakers.
A CCS hub takes CO2 from several different emitters, transporting and storing it using common infrastructure. It reduces the costs and risks for individual companies and governments, and opens up CCS as a decarbonisation option at scale.
The company is working with its counterparts in PTT Group to conduct a feasibility study on the application of a CCS hub to reduce the group’s GHG emissions and other industries in adjacent operational areas. These ongoing projects aim to support the country’s goal to reach net zero emissions.
“We believe that northern part of the Gulf of Thailand can potentially become what we call a CCS hub, where we have a large sink area,” he notes. “So our strategy is meant to make sure that we maintain our energy security, but not at the expense of the energy transition; in the meantime, we will not slow down our CCS projects.”
He continues: “But yes, we have to understand that this type of technology would require massive capital investment. Industry players, the
government, and the regulators must think about how we can make it work in terms of a business model.”
“We would like to be part of the technology, in-house or externally, and we are ready to invest with anyone who has a new type of technology for the transition of energy.”
Montri Rawanchaikul, CEO, PTTEP
CCS: a key contributor to net zero
As the world moves to cleaner sources of energy, Rawanchaikul notes that the energy transition will not happen overnight. “We don’t have any kind of energy to replace [gas] as of tomorrow, and it will not be an overnight sensation.”
He highlights four key components that he believes will ensure a successful and smooth energy transition, emphasising the role of CCS throughout. The first component is technology, which, according to Rawanchaikul, goes hand-in-hand with collaboration.
“We need to share all the knowledge of how our people use technologies and how it’s being implemented in the world. That’s why I support symposiums, I support conferences and seminars as a venue to exchange knowledge and experience, and I think that we need to get together and collaborate in order to apply the appropriate technologies,” he adds. In fact, he is also looking forward to the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) later this month.
Once the oil and gas industry understands the necessary technology, he says the second part is studying the economic aspect. “How well we control the funding and cost will dictate commercial viability of the CCS project,” he says.
The third key component, according to Rawanchaikul, is studying environmental impact. “We try to reduce the carbon footprint by looking at decarbonisation, CCS, and so on. But with any form of a new energy technology in the future, we also need to think about a new type of footprint,” he notes.
The last component, which he says is of the utmost importance, is regulation. “Industry players cannot work alone. We cannot wait until the technology is in place before we start changing regulations. Regulations must support this technology,” he adds.
PTTEP’s Middle East focus
While focusing on technologies and energy transition solutions, PTTEP won’t neglect its core business: E&P. As part of its growth plans, the company aims to increase its presence in the Middle East, which Rawanchaikul calls “a strategic area”.
“In the Middle East, Oman and the UAE will be our heartland where we would like to see our business grow.” That goal is well underway: In August 2022, PTTEP and Eni announced a significant gas discovery in the first exploration well in Abu Dhabi Offshore Block 2. The consortium has already started drilling nearby prospects to further evaluate the potential of the block.
He calls it one of the “major discoveries” that PTTEP has made in recent years – the combined preliminary estimated raw gas is 2.5 to 3.5 trillion cubic feet (tcf). “We are eager to push forward with the development programme and we believe the consortium can assemble the required capability, experience, and technology to accelerate field development and production to support the UAE’s mission towards gas self-sufficiency,” he says.
Expressing delight at the discovery, Rawanchaikul says that PTTEP has developed a great work relationship with ADNOC and that the state-owned company is very supportive of Eni’s “fast-track development” approach, which reduces the time between discovery and production.
In partnership with Eni, PTTEP presently invests in 4 projects in the UAE: Abu Dhabi Offshore 1, Abu Dhabi Offshore 2, Abu Dhabi Offshore 3, and Sharjah Onshore Area C. It has also invested across upstream and midstream in Oman, including a 20% participating interest in the BP-operated Block 61, one of the largest gas developments in the Middle East, with total gas resources of 10.5 tcf.
Outside of the Middle East, Algeria is “another exciting story” for PTTEP, Rawanchaikul says, adding that there is potential to unlock new resources in the region.
In Southeast Asia, PTTEP is actively operating in Malaysia, where the company has made a number of significant oil and gas discoveries over recent years. Rawanchaikul says the company wants to carry out more investments to provide reliable energy supply to the region.
Clearly, PTTEP’s focus on clean technology and net zero does not come at the expense of its upstream activities, as Rawanchaikul is positive about the sector’s future, and the role of gas in the energy transition.