Reuters-Thai PTT expected to pay Ya

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Subject: Reuters-Thai PTT expected to pay Yadana gas bill soon

Friday April 23, 3:58 am Eastern Time
Thai PTT expected to pay Yadana gas bill soon
By Anchalee Koetsawang

BANGKOK, April 23 (Reuters) - State-run Petroleum Authority of Thailand
(PTT) is expected to resolve take-or-pay discussions with Myanmar's Yadana
gas producers by the end of April and pay for the $62 million bill soon,
industry sources said on Friday.

The producers of the Yadana gas project include Total , Unocal (UCL - news)
and PTT Exploration and Production .

The negotiations are now narrowed down to the issue of compensation. PTT had
said the producers must pay for failing to meet certain requirements
specified in the contract, sources told Reuters.

The payment, the first of a 30-year contract, is due by the end of March.

This compensation, once concluded, will be deducted from the gas bill,
allowing PTT to pay less than $62 million.

``The talks made some positive progress. I think the parties concerned will
be able to resolve the issue by the end of this month. Total executives
themselves came to Thailand recently for the discussion,'' said a source
closed to the talks.

``PTT indicated that it is willing and able to pay the bill, but would like
the producers to meet contract requirements as well,'' he said.

The sources said the energy content in the natural gas from Yadana field was
slightly lower than that specified in the contract.

``That is the only technical loophole in the contract that gave PTT some
leverage to demand the compensation. The amount of compensation is being
negotiated,'' the source said.

PTT signed a take-or-pay contract with Yadana concessionaires to start
taking gas from the offshore project in Myanmar from August 1998 to use as
fuel for the Electricity Generating Authority of Thailand's (EGAT)
Ratchaburi power plant in western Thailand.

The contract required PTT to take an initial 65 million cubic feet per day
(mmcfd), rising to 525 mmcfd over 15 months.

However, PTT has been able to take only five mmcfd so far.

Due to a delay in the completion of the Ratchaburi power plant, PTT could
not meet their contract minimum volume obligation for 1998.

During the negotiation, one of the PTT's proposals was to swap gas between
products from the Yadana source and those from the Gulf of Thailand which is
cheaper.

``But that proposal had been dropped,'' said another regional source
involved in the negotiation.

The sources said the current expectation is for commercial production from
the Yadana to fully begin in the third quarter of 1999 and increase to full
capacity in 2000.

``Information we have to date gives us a comfortable degree of confidence
that Yadana gas sales are unlikely to be delayed beyond the third quarter.
PTT might even be able to start taking the gas sooner than that,'' he said.




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