DMF halts all Sor Por Kor oil and gas production

The Energy Ministry’s Department of Mineral Fuels (DMF) yesterday ordered all oil and gas projects that overlap Sor Por Kor land to stop production, in compliance with a court ruling.

On Monday the Supreme Administrative Court revoked the Agricultural Land Reform Committee’s order allowing the use of natural resources in areas of land reform for any purposes other than agriculture, known as Sor Por Kor land.

Energy Minister Anantaporn Kanjanarat said the halt in operations would have a minimal psychological impact on petroleum exploration and production.

However, the ruling will raise fears about other investments on agricultural land plots in the future, analysts said.

According to a source who requested anonymity, an idea has been floated for the National Council for Peace and Order to invoke Section 44 of the interim charter to break the impasse.

On Tuesday, SET-listed PTT Exploration and Production Plc (PTTEP), Thailand’s only upstream oil firm, temporarily ceased petroleum production in some parts of its onshore petroleum block Sirikit 1 (S1) to comply with a court ruling. The move cut production at the S1 block by 55% from the block’s total production of 27,351 barrels per day.

Following the DMF order yesterday, all seven companies affected suspended their operations, decreasing petroleum production by 16,000 barrels of oil equivalent per day (boed). Of the amount, 15,000 boed was from PTTEP.

Apart from PTTEP, the six other companies that ceased operations are CNPHK Thailand Ltd, Eco Orient Resources Thailand Ltd, PTTEP SP, Apico Khorat Ltd, Twinza Oil Ltd and Yanchang Petroleum Thailand Ltd.

The DMF estimates the dip in production is worth 47 million baht per day, cutting the concession fees paid to the government by 26 million baht per day.

The suspension is the second court order to affect millions of baht in investments. In March, the Supreme Administrative Court ruled it was inappropriate to rent out Sor Por Kor land in Chaiyaphum, which had been designated for farming purposes, to build wind farms. It further ordered the revocation of a licence to develop a wind farm there.

The ruling raised concerns among other wind farm operators and forced related government agencies to sit down and seek a solution, particularly the Agricultural Land Reform Office (Alro), which oversees Sor Por Kor land issues. The Alro ultimately agreed that 17 wind farm projects located on Sor Por Kor land are legal and can continue as planned.

However, analysts say this is another case of two contradictory Thai laws causing uncertainty for investors.

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