Boys on roller skates fill up tanks at a petrol station.

Driven by a modest economic recovery and relatively stable and low petroleum prices, overall petroleum demand, excluding that of petrochemical industries, grew 3.4% in the first nine months to 934,900 barrels of oil equivalent per day (BOED).

The growth was fuelled largely by robust natural gas demand for power generation and to a lesser extent, for industries. Gas consumption offset declining demand for refined oil products.

Figures from PTT Plc showed that natural gas consumption rose by 19.8% in the first nine months of the year to an average of 348,100 BOED, while oil product demand slipped 4.3% to 586,800.

The bulk of gas consumption, or 91.4%, was used for power generation, reflecting the country's heavy dependence on gas for generating electricity. About 70% of Thai electricity is generated by natural gas and the pattern is expected to prevail over the next several years.

In the first nine months of the year, the Electricity Generating Authority of Thailand (Egat), which is responsible for most of the country's power supplies, raised its gas consumption by 13.4% year-on-year to 230,000 barrels of oil equivalent per day.

Private power producers increased their gas consumption by 42.5% to 88,100 BOED while gas demand for industries increased by 15.9% to 30,000. Consumption of diesel oil fell 0.2% to 262,000 while gasoline declined 0.6% to 116,900, reflecting a slowdown in transport activities.

But demand for fuel oil plunged 32.5% to 79,200 barrels of oil equivalent per day, mainly because it was replaced by natural gas at power plants and industries. Aviation fuel demand rose 7.5% to 63,900 and consumption of liquefied petroleum gas (LPG), mainly for cooking, grew 12.7% to 63,800.

The country's total oil and gas imports in the period were the equivalent of 805,700 barrels of oil a day, up 15.7% from the same period last year, driven by a rising imports of Burmese natural gas. At the same time, deliveries from indigenous gas fields were trimmed in order to meet the contractual volumes with Burmese gas producers.

Imports of Burmese natural gas, specifically from Yadana and Yetagun fields in the Gulf of Martaban, soared by 365.7% to 86,900 barrels of oil equivalent per day, against a 1% drop in indigenous gas to 322,600.

Crude oil rose imports rose 9.7% to 711,100 barrels per day while imports of finished oil products fell 73.7% to 7,800 barrels of per day.

The cost of petroleum imports in the first three quarters rose 22.29% to 250,437 million baht: 224,040 million baht for crude (up 16.69%), 23,406 million for Burmese gas (up 521.8%) and 2,991 million for refined oil products (down 66.8%).

Total indigenous petroleum production, including natural gas, condensate and crude oil, increased 0.2% to 436,000 barrels of oil equivalent per day.

PTT settles gas payment: PTT Plc, formerly the Petroleum Authority of Thailand (PTT), settled the US$398-million payment it had withheld for natural gas it had contracted to purchase from the Yadana and Yetagun developing groups in Burma.

The payment, $317 million for the Yadana gas and $81 million for gas from Yetagun, was supposed to have been made in March but was only settled early in July.

More gas in the pipeline: A PTTEP engineer turns a valve at the Bangkot gas field.

The state oil firm, now partially privatised, also paid interest ,based on the London Interbank Offered Rate plus 1%, to the groups _ one led by TotalFinaElf and the other by Premier Oil of the UK.

The payment for the 2000 take-or-pay gas came amid signs that PTT might be making some headway in its protracted negotiations with the two groups for amendments in the supply contracts.

Gas price cut: The Thai government, meanwhile, made progress in its campaign to have producers reduce the charges for gas from the Gulf of Thailand to help cut domestic electricity generating costs.

Groups led by ChevronTexaco Corp and Unocal Corp signed separate deals offering discounts to PTT for purchases of gas from their fields above the contractual volumes.

The accords cost the two US gas producers a total of 1.15 billion baht in return for the delivery of additional 76.3 billion cubic feet (Bcf)

More specifically, Chevron Offshore (Thailand), a unit of ChevronTexaco, has agreed to supply 58 Bcf of additional gas from its B 8/32 block to PTT at about 12% below the established wellhead prices for a 29-month period ending in February 2004. The total discount is 512 million baht.

Unocal Thailand will sell an additional 18.3 Bcf of gas from the Erawan and Unocal I and II fields to PTT at about 30% below the normal tariff for a 15-month period ending in September 2002.

Heads together: Oilmen have busier days as petroleum demand rebounds.

The accords followed an agreement of the same nature that PTT had struck earlier in 2001 with the Bongkot gas consortium, led by its subsidiary, PTT Exploration & Production Plc. The producers agreed to provide a discount of 863 million baht to PTT for taking an additional of 31.14 Bcf of gas from August 2001 to May 2002.

JDA pipeline gets nod: Progress was also seen on the Thailand-Malaysia gas pipeline and separation project, which had been the focus of sometimes violent protests by southern residents concerned about its environmental impact.

The Office of Environmental Policy and Planning (OEPP) gave final approval to the project's environmental impact assessment (EIA) report, clearing one of the last stumbling blocks.

The approval came after several rounds of amplification to the reports that the project sponsor, Trans Thai-Malaysia (Thailand) or TTM, had been asked to produce.

The final approval sent a strong signal to TTM, a joint venture of the Malaysian state oil firm Petronas and PTT Plc to proceed with the planned venture.

However, the project's opponents, mainly villagers in Songkhla, reacted angrily to the OEPP approval, vowing to "fight to death" to prevent the project from getting off the ground.

Prasert Bunsumpun, president for the gas business unit of PTT, said the passage of EIA could clear the Malaysian government's concerns that the Thai side had not done enough to deal with opposition and expedite the project, already behind schedule.

Malaysia has been anxious because it is contractually bound to take delivery of the natural gas, which will be transported ashore by a pipeline from the Thailand-Malaysia Joint Development Area (JDA) in the South China Sea.

The parties involved in the project now expect to see the pipeline come online in the fourth quarter of 2002 with the start-up of gas supplies from Cakerawala, the first field under development in block A-18, at 390 million cubic feet per day (MMcfd).

LPG prices decontrolled: Changes have occurred as well in the pricing of liquefied petroleum gas (LPG), used mainly for cooking. Authorities lifted the controls on retail prices on Nov 1, but will continues to regulate wholesale prices.

On Nov 15, they approved an 11% increase in the wholesale LPG price including VAT, to 9.7532 baht per kilogramme.

Authorities allowed the controlled wholesale price to increase as part of a continued effort to end heavy subsidies given to consumers. The subsidies have cost 17 billion baht and created a huge deficit for the state oil fund, which collects levies on motor fuel to subsidise cooking gas prices.

PTT privatisation success: The partial privatisation of PTT Plc in November was declared a success with strong local and overseas demand for its shares.

Subscriptions by foreign institutional investor were five times the amount allocated. Strong demand prompted authorities to raise the total share offering to 920 million shares from the 800 million planned earlier.

As a result, the proportion of shares offered to local investors increased from 60% to 64.24% while foreign institutional investors signed on for the remaining portion.

PTT set the IPO price at 35 baht a share, raising a total of US$631 million. The shares have hovered close to the IPO price since trading began.

However, PTT remains largely a state firm with Finance Ministry holding slightly less than 75% of its shares.