by Stingray, this blog national security journalist
A top advisor to the Thai government on oceanic dispute, says foreign oil and gas drillers granted drilling concessions by Cambodia in Thai-Cambodia disputed claims in the Gulf of Thailand, will likely not drill in the area because of lack of insurance.
“The cost for each platform is significant and because of the dispute, there is no insurer that will issue policies to cover the platform,” said the Thai government advisor.
Cambodia just gave French oil firm Total and a Japanese firm, in the past two months, exploration and development in an area that Thailand also gave other firms the rights.
Negotiation between Thailand and Cambodia on the disputed territory has stopped, as a result of failure to reach an agreement. The disputed area is reported by the World Bank as having significant potentials.
Petroleum economics says the average central platform cost about US$1 billion and its network of drilling stations, about US$15 million per platform. It cost about US$50,000 to explore an area about 1 square km and the pipelines cost about US$1 million per kilometer. The investments takes 10-15 years to recuperate the investments. All of that for an average yielding field.
Because of the dispute, Thailand had rushed in to build a small naval outpost, stationed with fast attack craft that are ready to deploy Thai Navy Seals or special forces, in the area to guarantee no encroachment on Thailand’s territory. Many military analyst saw the move as preparing for potential military action to protect Thai claims.
That readiness to use force, if needed, have resulted in most insurers declining to get involved in insuring any platform in the area. However, French and Japan have significant naval capability within reach of the Gulf of Thailand. Therefore, it is yet to be seen if an insurer will indeed insure the platforms or not, if they are protected.
Over more, the Gulf of Thailand is dotten with Thai oil and gas platforms. While Thailand has sophisticarted air to surface survailance systems, it lacks the AWACs aircrafts that can give 24/7/365 coverage of ocean surface. The only country in ASEAN with AWACs is Singapore, but the aircrafts are operated under supervision of the US.
Many Thai oil and gas platforms are owned under concession by US oil giants.