Gas bubbles and oil pools: mainly a buried treasure

By , business correspondent of The Christian Science Monitor.

A scent of natural gas in Thailand's political air now contains a whiff of oil as well.

For the nation's energy future, the smell of oil may be sweeter.

Last year Thailand turned on its first pipeline of natural gas from an offshore well and discovered its first oil in an onshore strike as well.

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So far, euphoria surrounding this buried treasure outpaces the reality of full production. But it is clear that Thailand may soon carry the unique distinction in Asia of being both a major energy producer and a food exporter.

At present Thailand must pay $3 billion a year for its oil -- all imported -- using up all the money from its top three foreign exhange earners: tourism, rice exports, and tapioca exports. Of all developing countries, Thailand ranks as the sixth-biggest oil importer.

By 1986, however, the country expects to reduce oil's role in total energy use from 75 percent to 46 percent, mainly with 526 million cubic feet of gas a day. The first 100 million cubic feet began flowing last November from a Union Oil platform through the longest submarine pipeline in the world (265 miles) into two power stations in Chonburi Province south of Bangkok. By the end of this year at least 200 million cubic feet will flow.

Thailand sits on one of the world's largest gas bubbles. Of 87 wells drilled in the Gulf of Thailand, 47 have found gas. According to the Petroleum Authority of Thailand, probable and proved reserves amount to 16.5 trillion cubic feet, perhaps the fifth-largest pool in Asia. More strikes are expected. Yet only one well is flowing with an agreed-upon price ($2.20 per 1,000 cubic feet at the wellhead). The Thais, having weathered the oil crisis well up to now, know they can afford to sit on the gas a while longer, and they have proved tough negotiators. Still, a deal with Union Oil is expected soon for several of its other 10 wells.

However, Texas Pacific Company Thailand Inc., owned by Canada's Seagram Co. and having found about half the reserves in deeper and more distant wells, has been left clutching the air. Talks on price are stalled.

''They have been talking to the press more than us,'' says Tongchat Hongladromp, governor of the Petroleum Authority of Thailand. ''We do not need TP's fields.''

By next year Texas Pacific may have to decide whether to sell out its concession after spending a decade and at least $125 million on exploration. Last year it joined with a Thai firm, the PSA Group, to propose a $3.2 billion project to liquefy the gas for export, which would be the largest single investment in Thailand's history.

But Asia has a surfeit of LNG projects, and Thailand so far has chosen to convert Union's gas into domestic products rather than turn TP's gas into cash for government coffers.

Also, gas found this year in Thailand's poor northeast by may be cheaper. Still, political pressure may build to export gas.

''I personally believe there is enough gas to export,'' says Dr. Tongchat.

By the year 2000 Thailand hopes to build up Southeast Asia's largest petrochemical complex using gas. Dr. Tongchat believes Thailand will be able to export fertilizers and plastics to Burma, Laos, Vietnam, and Kampuchea.

''That would be a 100-million-person market,'' he says.

Such a complex, with a gas separator and a fertilizer and soda-ash plant, is in the works near the former US Navy base of Sattahip, where the pipeline comes onshore.

Thailand's leaders place no great hopes on using gas to replace gasoline and diesel, even though 80 percent of Bangkok's taxis and few buses now run on liquefied petroleum gas. The 1979 oil price shock jolted the government out of subsidies into realistic world pricing. This political time bomb of raising energy prices, which helped fell the previous government of Kriangsak Chomanan, has been generally handled well by his successor, Prime Minister Prem Tinsulanonda, observers here say.

Conservation measures have been introduced to help cut energy consumption from 7 percent growth to 4.8 percent. Filling stations are closed on Sundays. Speed limits have been imposed and evening television banned in Bangkok.

Still unresolved is what Thailand will do with half of its oil refineries' output -- furnace oil -- which is being replaced by gas in electric-power plants. Refinery mixes are expensive to change, and world markets are aglut with furnace oil.

Thailand's newest energy hope lies in oil. Last November, Royal Dutch Shell's subsidiary found a 4,600 barrel per day (bpd) well in the north-central plains. Company officials expect 60,000 barrels a day by 1986 at best, about one third present needs. Bangkok Bank is studying the effects on the economy of 150,000 bpd. Any sizable amount would ease oil imports and loosen up credit to Thailand.

The country's geology, however, indicates no giant fields, perhaps just a series of ''thin-sand stringers.''

''There is a lot of enthusiasm,'' says Dr. Snoh Unakul of the National Economic and Social Development Board. ''But we have to be cautious in our expectations.''

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