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Energy Dilemma of Natural Gas Trading between Thailand and Myanmar

On 1 July 2024 by SPP

Author: Ei Ei Phyu

Advisor: Asst. Prof. Pobsook Chamchong, PhD

  1. Introduction

Natural gas is a crucial non-renewable energy source, favored for its cleanliness, efficiency, and abundant reserves globally, meeting significant energy needs in gas-consuming countries (Alam et al., 2016). Thailand and Myanmar are critical players in Southeast Asia’s natural gas sector, but the trading relationship between the two countries faces an energy dilemma. Collaboration and trade have a long history, with Myanmar exporting natural gas to Thailand, contributing to bilateral commerce worth US$ 4.12 billion (Myanmar, 2021). Thailand heavily relies on natural gas imports from Myanmar, which raises concerns about energy security and human rights violations due to pipelines passing through ethnic territories (Middleton, 2012). Myanmar’s gas shipments to Thailand have decreased by 2% annually in 2022, adding complexity to the situation. The departure of Total Energies from Myanmar further complicates the energy dilemma (Yep & Ang, 2021).

Thailand’s decreasing share of domestic gas production and increasing reliance on imports exacerbate the energy challenge. The natural gas trade impasse has significant political, geopolitical, and energy security implications for both nations. Close coordination, energy diplomacy, and national security considerations are necessary to navigate this complex energy landscape. Comprehensive knowledge is essential to develop effective plans and policies promoting energy sustainability and constructive bilateral connections between Thailand and Myanmar.

  1. Problem Statement

Thailand heavily relies on natural gas for power generation, with 72% sourced domestically and the rest imported from neighboring countries. Most of Thailand’s power comes from thermal generation, primarily coal, and natural gas, accounting for 93.8% of the generation. Hydro, geothermal, solar, small hydro, and biomass comprise the remaining share (Energy Outlook, 2021). However, Thailand’s dependence on natural gas, mainly imports from Myanmar, raises concerns about long-term sustainability and sector vulnerability. The political dynamics surrounding the energy trade gained significance due to international criticism of Myanmar’s human rights record after the military coup in February 2021.

Figure 2: Estimated natural gas demand and supply from 2015 – 2036 (Source: Gas Management Plan 2018 in Thai Language Version, Ministry of Energy, Thailand)

The international community is pressuring Thailand, a key economic ally of Myanmar, to take a more explicit stance against the military junta. The intertwined relationship between energy reliance and political response adds complexity to the energy dilemma, requiring further exploration. Existing literature lacks a comprehensive understanding of Thailand’s political position toward the military junta and its implications for the natural gas trade. Filling this knowledge gap will contribute to a holistic understanding of the energy dilemma, including its political dimensions, and inform policy discussions and decisions concerning the natural gas trade between Thailand and Myanmar.

  1. Policy Analysis

Figure Futures Triangle (Source: Public Policy and Governance Lecture Slides, SPP)

Futures Triangle Analysis on Thailand Energy Policies and Natural Gas Plan

Applying the Futures Triangle analysis framework, it evaluates the prospects of Thailand’s energy sector to resource dependency, particularly in natural gas imports. The following is a compact analysis based on the provided information upon the thematic area of:

Desired Future (Pull of the Future): Thailand’s desired future is to reduce its resource dependency on Myanmar for natural gas imports and effectively manage the energy dilemma. The country aims to achieve the following goals diversifying energy sources, enhancing domestic energy production, strengthening regional cooperation, promoting energy efficiency, and strategic steps for energy security.

Weight of the Past (Barriers to Change): Thailand faces several barriers in achieving its desired future and reducing resource dependency on Myanmar for natural gas imports:

  • Declining Domestic Production: The decline in domestic natural gas production poses a challenge, necessitating efforts to ensure a stable and sustainable energy supply in the future.
  • Import Dependency: Growing reliance on natural gas imports, mainly from Myanmar, raises concerns about energy security and economic stability, requiring strategic measures to mitigate import dependency and secure alternative energy sources.
  • Political Dynamics: The interconnectedness of energy trade with political relations complicates the energy dilemma. International pressure on Thailand to take a stance against Myanmar’s military junta affects energy cooperation decisions.
  • Infrastructure Limitations: Significant investments and coordination among relevant agencies are needed to develop efficient infrastructure that supports alternative energy usage across sectors and meets regional demand.

Push of the Present: Thailand is actively pushing for changes in its energy sector through various initiatives:

  • Power Development Plan (PDP): The PDP 2018-2037 prioritizes renewable energy, energy efficiency, and environmental sustainability while ensuring stable electrical systems, promoting low-cost electricity generation, increasing efficiency, and developing an intelligent grid power network.
  • Gas Plan 2018: The Gas Plan promotes natural gas usage, reduces air pollution, and develops infrastructure. It aims to accelerate exploration and production, ensure competition for energy sector sustainability, and adapt to changing technology and energy landscapes.
  • Renewable Energy Development Plan (AEDP): The AEDP for 2018-2037 aims to achieve a 30 percent share of renewable and alternative energy in electricity, heat, and biofuels. By improving policies, advancing technology, and enhancing awareness, Thailand seeks to promote the adoption of renewable energy sources.

 

Futures Triangle Analysis on Myanmar Energy Policies and Natural Gas Trading

Desired Future

Myanmar’s target future is to effectively manage its energy dilemma by implementing a comprehensive and sustainable energy policy.

Additionally, Myanmar aims to strengthen its natural gas trading relationship with Thailand by ensuring a reliable and efficient gas supply while addressing geopolitical challenges and uncertainties.

Weight of the Past

  • Prolonged Period of Military Rule: The historical context of Myanmar’s energy sector includes a prolonged period of military rule (1962-2010), which limited the development of the natural gas sector and resulted in the underutilization of its resources.
  • Inconsistent Regulatory Framework: Myanmar’s legal system comprises a mix of different laws, leading to potential inconsistencies between guidelines and regulatory practices. This has created challenges in governing the oil and gas sector effectively.
  • Geopolitical Unrest: The geopolitical challenges, such as the departure of Total Energies and Chevron from the Yadana gas field, have raised uncertainties in the energy sector and pose potential barriers to stable and reliable natural gas exports.
  • Low Per Capita Energy Consumption: Myanmar’s low per capita energy consumption indicates a need for significant improvements in energy access and infrastructure development to achieve universal electrification and energy security.

 

Push of the Present

  • Energy Exporter: Myanmar’s status as a net energy exporter allows it to leverage its natural resources, particularly natural gas, to enhance economic growth and attract foreign investment.
  • Renewable Energy Potential: Myanmar’s abundant renewable energy sources, including hydropower, offer potential for sustainable energy development and rural electrification.
  • National Energy Policies: Myanmar has implemented various energy policies, including the National Energy Policy (2014), Energy Master Plan (2015), and National Electrification Plan (2015), which provide a foundation for shaping the future energy landscape.

Stakeholder Analysis

The stakeholder analysis of the current relationships between Thailand and Myanmar reveals the following key actors and their influence:

Governments: The governments of Thailand and Myanmar play a significant role in shaping energy policies and decision-making processes. Myanmar’s military regime heavily relies on natural gas profits, and its relationship with Thailand is paramount. Thailand’s government engages in bilateral meetings with the military junta to reset relations and manage border security issues. However, this stance diverges from other ASEAN countries, leading to challenges in conferring legitimacy and persuading ASEAN counterparts. Thailand’s government is concerned about the impact of Myanmar’s instability on its energy security, given its dependence on Myanmar for 15% of its gas supply.

Energy Companies: Foreign energy companies, including Thailand’s PTTEP, have been impacted by human rights concerns and a military takeover in Myanmar. Some companies have postponed or abandoned their natural gas operations. The crisis for Myanmar caused losing a primary foreign income source, impacting its revenue and economic stability.

International Organizations: International organizations play a role in addressing the energy dilemma and promoting sustainable solutions. Their involvement can influence policy development, human rights considerations, and regional cooperation efforts.

ASEAN Member States: ASEAN member states have various positions in Myanmar’s military government. While some countries, such as Singapore, the Philippines, Brunei, Indonesia, and Malaysia, reject the junta’s legitimacy, others, like Cambodia, Laos, Thailand, and Vietnam, cooperate with the military government, excluding the other ASEAN nations. Thailand’s independent policy towards Myanmar poses challenges in managing relations within ASEAN.

Ethnic Insurgencies and Refugees: The ongoing conflict in Myanmar, triggered by the 2021 military coup, has led to armed resistance and exploitation by ethnic insurgencies. Many refugees seek refuge in Thailand, burdening Thai authorities. The welfare and security of these refugees are critical concerns for both Thailand and Myanmar.

Civil Society Organizations: Organizations often advocate for human rights, environmental sustainability, and social justice. They can influence public opinion, raise awareness about the energy dilemma, and push for policy changes aligned with their objectives.

Public Opinion: Public sentiment in Thailand and Myanmar shapes the countries’ policies towards each other. Due to its violent history and human rights concerns, Thailand may have domestic pressure to take a stricter stance on Myanmar’s military government. Similarly, Myanmar’s public perception of Thailand’s government as “pro-West” and supporting “terrorists” can influence bilateral relations.

Regarding influence, the key actors vary in their power and leverage. Governments hold significant power and influence over energy policies and diplomatic relations. The Prayuth government engages in cautious diplomacy with Myanmar’s military junta to address security concerns and manage potential refugee influx. This independent policy stance diverges from other ASEAN nations and can impact regional dynamics. Human rights concerns and the military takeover influence energy companies’ decisions to delay or abandon operations in Myanmar. This has implications for energy security and business expenses, including those in Thailand.

  1. Policy Recommendation

The research findings shed light on the energy dilemma faced by Thailand and Myanmar, focusing on Thailand’s heavy reliance on Myanmar’s natural gas imports for electricity generation. This dependency risks Thailand’s energy security and economic stability, while the bilateral strategy with Myanmar’s junta carries significant political implications. To tackle these challenges and promote energy security and sustainability, the study proposes the following conclusions and policy recommendations:

In the short term (1-3 years), immediate actions are necessary. Thailand should prioritize energy diversification by investing in renewable energy projects such as solar, wind, and biomass to reduce its dependence on natural gas imports from Myanmar. Crisis management efforts should be implemented, with both countries engaging in dialogue and cooperation to address the impact of Myanmar’s political and socio-economic challenges. Providing humanitarian support for refugees seeking shelter in Thailand is essential to alleviate the burden on Thai authorities.

In the medium term (4-7 years), Myanmar should focus on infrastructure development, particularly in renewable energy projects like hydropower and solar, to bolster domestic energy production and reduce reliance on natural gas exports. Enhancing regulatory consistency and transparency will attract foreign investment and stimulate growth in Myanmar’s natural gas sector. Thailand and Myanmar should align their energy policies and address each other’s concerns to foster mutual understanding and cooperation. Investing in energy-efficient technologies and practices will optimize energy consumption and reduce wastage, benefiting both countries.

In the long term (8-10 years and beyond), research and innovation must be prioritized to develop new energy technologies and explore untapped energy sources. Advancements in clean energy and smart grid technologies will contribute to long-term energy sustainability. Addressing Myanmar’s political instability requires long-term diplomatic efforts and regional collaboration to foster sustainable peacebuilding and create an environment conducive to energy sector growth and cooperation. Engaging in cross-border energy trade agreements will reduce dependence on a single supplier and promote knowledge sharing and policy coordination.

ASEAN should work towards establishing a regional energy integration framework that facilitates energy trade and collaboration among member states to foster greater regional energy security. Collaborative efforts within ASEAN will contribute to a more interconnected and resilient energy landscape, promoting stability, sustainability, and prosperity in the region’s energy sector.

In conclusion, addressing the energy dilemma between Thailand and Myanmar requires a combination of short-term, medium-term, and long-term policy measures. Implementing energy diversification, crisis management, infrastructure development, energy efficiency, research and innovation, and conflict resolution will enhance energy security and cooperation between the two countries. Collaborative efforts within ASEAN will play a crucial role in fostering a stable and sustainable energy future for the region.

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