Legislative Proposals on the Petroleum Act B.E. 2514(1971) for Energy Security and Low-Carbon Society

Abstract

The Petroleum Act B.E. 2514 (1971) has limited capabilities to ensure the country’s energy security. These limitations are, inter alia, resulted from existence of a provision that limits production renewal, absence of provisions preventing disruption of petroleum production in the case when there is a change in operatorship. In the case of change in operatorship, the law does not recognize the new operator’s right of access to the production site occupied by the existing operator. In relation to investment promotion, it faces difficulties in incentivizing as well as to facilitating petroleum exploration and production investments. It fails to reduce cost associated with petroleum operation as it lacks a provision on common facilities and, importantly, contains a provision which can serve as a clear basis for collection of land access fees. Under the current decommissioning regime, the operator is required to deliver financial security for decommissioning of upstream petroleum facilities and installations at the ending stage of the petroleum upstream life cycle. However, these payments cannot be counted as expenses ordinarily arising from petroleum operation for petroleum tax calculation purpose under the Petroleum Income Tax Act B.E. 2514 (1971). In relation to enforcement, the law lacks a provision clearly recognizing a power of an official to issue an administrative enforcement measure. In addition, its stipulated penal sanctions cannot effectively deter criminalized offences. The Petroleum Act B.E. 2514 (1971) cannot serve as a legal basis for authorizing carbon storage site exploration as well as carbon injection into geological formations. To overcome the identified challenges, the Petroleum Act B.E. 2514 (1971) shall be amended to include provision ensuring continuity of petroleum production, integrating power exercising of different state agencies to support right of access to the land for petroleum operation. The decommissioning security shall be replaced by the decommissioning account. Some criminal sanctions shall be abolished or revised. Moreover, the law shall extend its scope to regulate carbon storage site exploration as well as carbon injection into geological formations.