Oil was discovered near Fang in the far north of the country in the early 1950s, but by the late 1970s the principal field was reported close to depletion. Onshore deposits were believed to exist in other parts of the country, and several foreign firms had exploration concessions in the 1980s. Exploration in the 1970s in the Gulf of Thailand uncovered oil in limited quantities. Oil shales were found at Mae Sot in Tak Province in the North. Surveys in the mid-1970s indicated a reserve of about 2.5 billion tons. A smaller deposit, estimated at about 15 million tons, existed in Lamphun Province, also in the North. Surveys in the Northeast from the mid-1970s showed the existence of about 2.5 billion tons of oil shale in that region. Although 4 million barrels of petroleum were produced in 1983, extensive commercial exploitation still seemed remote because of comparatively high production costs.
In the early 1980s, petroleum products provided about 68 percent of the annual energy requirement. The country was highly dependent on petroleum imports, and increasing world petroleum prices had a serious impact on the country’s balance of payments. In 1980 there were three large, privately operated, oil refineries having a combined design capacity of 165,000 barrels per day (bpd); government sources estimated maximum capacity at 188,000 bpd. The Thailand Oil Refining Company (TORC) started operations in the mid-1960s with a capacity of 42,000 bpd. This was expanded to 65,000 bpd in 1971 under an agreement whereby the entire operation was to become the property of the Thai government in 1981. A second fully integrated plant was government owned but was leased for operation to the private Summit Industrial Corporation; the lease was due to expire in 1990. This plant had a design capacity of 65,000 bpd. A third plant was owned and operated by Esso Standard of Thailand and could handle 35,000 bpd. A very small 1,000 bpd plant was operated in the far north by the Ministry of Defense to refine domestic oil produced in the area.
Natural gas was found by international firms in offshore concessions in the Gulf of Thailand in the mid-1970s, and subsequent explorations determined that large quantities were recoverable, sufficient to alter favorably Thailand’s energy position. By 1979 two major gas fields had been generally delineated, one located approximately 425 kilometers south of a proposed pipeline terminal east of Sattahip at the upper end of the gulf, the other 170 kilometers farther south. Proven recoverable reserves in the first field were estimated at nearly 1.6 trillion cubic feet and probable recoverable reserves at 220 billion cubic feet. In the second field, proven recoverable reserves were 1.3 trillion cubic feet and probable reserves 4.5 trillion cubic feet. Two smaller fields about 365 kilometers south of the terminal site were estimated to have about 500 billion cubic feet of recoverable reserves. The country’s total proven reserves of natural gas were estimated at 8.5 trillion cubic feet in 1984. Thailand’s production of natural gas in 1987 was 162.3 billion cubic feet.
In late 1979, the World Bank approved a loan of US$107 million to the Petroleum Authority of Thailand, a state enterprise, to assist in the first-phase exploitation of the discoveries. A submarine pipeline was built from the terminal near Mapthaphut to a production platform at the major field 425 kilometers south in the gulf. When completed in the early 1980s, it was the world’s longest submarine pipeline. Additional pipelines were built to transport the gas overland, initially to the South Bangkok Thermal Power Plant and later to a new thermal power plant at Bang Pakong southeast of Bangkok, built in the early 1980s under EGAT’s 1978-85 power generation development plan. Gas was also distributed to industrial users along the pipeline route.