Thailand has announced its intention to resume negotiations with its neighbor Cambodia on a joint oil and gas exploration on October 10, 2024. Since the 1970s, border disputes between the two countries in the waters of the South China Sea have prevented the joint use of the resources in this region. The resumption of negotiations on the resolution of disputes in this region will be of particular importance for Thailand’s energy security.
Before discussing the energy negotiations between Thailand and Cambodia, it would be useful to briefly discuss the energy profiles of Southeast Asian countries. The region shows great diversity in terms of energy production and consumption. Fossil fuels account for a large share of the region’s energy production. Carbon energy (coal, oil and natural gas) is widely used to meet energy demand. Indonesia and Australia, in particular, are major players in coal production and exports.
Natural gas is an important source of energy in countries such as Thailand, Indonesia, Malaysia and Vietnam. These countries also produce natural gas, while some import it. Southeast Asia is particularly rich in subsea oil reserves. Malaysia, Brunei and Indonesia are the region’s leading oil producers. However, oil production in the region is often insufficient to meet domestic demand and is imported. Consequently, the region relies on both traditional fossil fuels and renewable energy sources to meet its growing energy demand.
By 2023, natural gas accounted for 67% of Thailand’s electricity generation (and 60% of its installed capacity) and 24% of its total consumption. The country’s proven natural gas reserves were estimated at around 97 billion cubic meters by the end of 2023. However, these reserves are rapidly diminishing. Moreover, Thailand’s crude oil reserves are estimated at 153 million barrels by the end of 2023. Cambodia, on the other hand, does not use gas for electricity generation and has no data on potential gas or crude oil resources.[1]
If Thailand continues at its current rate of consumption, the country’s natural gas reserves could be depleted within five to ten years. In addition to being a major automobile and tourism hub, the country aims to attract energy-intensive data centers. This, however, raises serious concerns about its ability to meet growing electricity demand.[2] Thailand’s Prime Minister Paetongtarn Shinawatra, who took office in September, aims to increase the country’s depleting energy reserves and contain rising electricity prices and rising fuel import costs.[3] Access to new sources of energy is essential for Thailand’s future and economic planning, and Thailand has made it one of its top priorities.
The 26,000 km² area in the waters of the South China Sea, where Thailand intends to start negotiations with Cambodia, holds about 10 trillion cubic feet of natural gas and an estimated 300 million barrels of crude oil. This offers a potential value of around 300 billion dollars.[4] These negotiations are expected to benefit companies such as Chevron, Shell and PTT Exploration & Production, which were awarded concessions in the 1970s but failed to fully explore the disputed area. ConocoPhillips and TotalEnergies have also reportedly obtained concessions in Cambodia.[5] Since exploration began in the 1970s, more than 29 trillion cubic feet of natural gas has been extracted in the region.
In September 2024, Thai Finance Minister Pichai Chunhavajira announced in a speech to parliament that he was open to negotiations, saying “We don’t need to resolve different views on borders, we just need to have a neighborly conversation and try to use resources.”[6] On this issue, which remains a priority for Thailand, neither side has given any timetable. Cambodian industry and the public sector are heavily dependent on energy imports. Therefore, it will not feel the same urgency as Thailand, whose reserves are running out. Cambodia could also use Thailand’s need as “diplomatic leverage” to gain influence in the region.
As a result, Thailand’s rapidly dwindling energy reserves and the need for economic growth have led it to seek cooperation with Cambodia. This cooperation could be an important turning point for both countries, both in terms of changes in their energy reserves and in determining the status of a region that has been disputed since the 1970s. Regional and global powers could also be involved in this process and exert influence over Thailand’s energy reserves and the disputed territory. A well-managed and positive outcome of the process could strengthen relations between the two countries and pave the way for economic growth. However, if the process is poorly managed, both Thai-Cambodian relations and regional security and economy could be severely damaged.
[1] “Thailand will restart talks with Cambodia to explore a large oil and gas field”, Enerdata, https://www.enerdata.net/publications/daily-energy-news/thailand-will-restart-talks-cambodia-explore-large-oil-and-gas-field.html, (Accessed: 14.11.2024).
[2] “Thailand Eyes $300 Billion Gas Field Frozen by Cambodia Dispute”, Bloomberg https://www.bloomberg.com/news/articles/2024-10-10/thailand-eyes-300-billion-gas-field-frozen-by-cambodia-dispute, (Accessed: 14.11.2024).
[3] Ibid.
[4] “Thailand aims to restart talks with Cambodia over giant offshore field”, Oilfield Technology, https://www.oilfieldtechnology.com/offshore-and-subsea/11102024/thailand-aims-to-restart-talks-with-cambodia-over-giant-offshore-field/, (Accessed: 14.11.2024).
[5] Ibid.
[6] “Thailand Eyes $300 Billion Gas Field Frozen by Cambodia Dispute”, a.g.e., (Accessed: 14.11.2024).
