Can Andaman Sea resources avert Thailand’s gas crisis/crunch?

While Thailand remains the third largest gas producer in Southeast Asia (behind Indonesia and Malaysia), production has declined since 2018. Sustained economic expansion is driving rising electricity demand that will keep gas and LNG central to the country’s energy future; yet in 2024, domestic gas production met only around 50% of the Thailand’s overall gas demand. Other sources of piped imports, such as Myanmar and the Malaysia-Thailand Joint Development Area (MTJDA), are also in decline. As reliance on higher-cost LNG increases, could the licencing of Thai exploration acreage in the relatively untouched Andaman Sea unlock new gas resources?

The facts

• A strong economic trajectory is driving rising power consumption in Thailand, with gas expected to remain the preferred medium-term resource for electricity generation — as long as there is sufficient, affordable and reliable supply.  
• Most Thai gas comes from the mature Gulf of Thailand area; Thailand also imports pipe gas from Myanmar and the Malaysia Thailand Joint Development Area (MTJDA); however, these sources are declining.
• The Thai government hopes that licencing its interests in the Andaman Sea and/or the Thai/Cambodia Overlapping Claims Area (OCA) can unlock new gas resources to lessen reliance on imported LNG.
• The regulator plans a new bidding round for exploration in the offshore blocks of the Southern Andaman in 2026.

Our view

Thailand is forging a path towards deeper LNG integration; however, excessive reliance on LNG could make the country’s economy vulnerable to market volatility and high prices.

Gas will dominate power generation through the medium term: With coal politically and socially unpopular and progress on renewables slower than hoped, we expect 60% of Thai power generation to come from gas through the mid-2030s.

Interest in the wider Andaman area is supportive, and growing: The wider Andaman area, in which India, Indonesia, Malaysia and Myanmar all have rights, is attracting new interest from explorers. Over one billion barrels of oil equivalent have been discovered in the Indonesian part of the Andaman since 2022, while ONGC and Oil India are both conducting multi-well offshore exploration campaigns around the Andaman Islands. In Malaysia the regulator this year awarded a working study of its neighbouring Langkasuka  basin to Eni, TotalEnergies, BP, PTTEP, PETRONAS and PERTAMINA.

Lack of data and fiscal clarity are issues: While there is plenty of interest, a lack of available geological data may put off bidders; greater clarity is also needed regarding fiscal and gas pricing terms. We understand the regulator is considering a reversion to concession terms, versus production sharing con-tracts, but what new incentives may be introduced to entice explorers to this frontier region is still unknown.

Looking ahead

Beyond 2030, Thailand faces a rapidly growing supply gap; our projections indicate a deficit of around one billion cubic feet per day (bcfd) in 2028 soaring to 4.2 bcfd by 2035 as existing resources decline. This is likely to either erode Thai gas demand, boost renewables, or help drive the opening up of new areas like the Andaman Sea to avoid overreliance on costly LNG imports.

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