Saturday, November 21, 2009

Tearing up MoU on JDA is so wrong

Bangkok Post The government's tit-for-tat response to Cambodia's appointment of fugitive ex-premier Thaksin Shinawatra as its economic adviser by tearing up the accord to settle disputed waters, raises the serious question whether this serves our country's interests at all.

Linking the MoU to Thaksin and politics because the MoU was signed on June 18, 2001 when he was in power, in order to justify the MoU's termination, is not a fair statement.

It's a pity the Abhisit Vejjajiva administration was so quick to cancel the memorandum of understanding (MoU) that would have led to a sharing of the potentially rich hydrocarbons in the territorial claims in the Gulf of Thailand, without first thoroughly deliberating the implications and consequences.

The government's decision to nullify the MoU reached with Cambodia in 2001 may not be the right means to retaliate against Phnom Penh's growing hostility and Cambodian Prime Minister Hun Sen's siding with Thaksin.

That knee-jerk reaction effectively demolished a foundation on which lay the goodwill and intention of both countries to negotiate for mutually-acceptable terms to open the 26,000-sqkm area for exploration and production while possibly unlocking the age-old disagreement of the maritime boundary.

The absence of an MoU means the framework for both countries to continue to find a solution to turn the disputed area into "a joint development area" (JDA) has been scuttled. The unilateral revocation of the MoU and the worsening relationship between the two countries have raised serious doubts whether the negotiations, which have dragged on over the past eight years, will ever resume in the near future. Clearly, it has diminished any opportunities to recover substantial petroleum deposits - 2 billion barrels of oil and more than 10 trillion cubic feet of natural gas which the World Bank estimates lies under the continental shelves - that could meet Thailand's insatiable energy demand.

The potential hydrocarbons in the area, especially natural gas, would be an ideal future source of energy supply for Thailand, which is relying more and more on gas, especially for power generation. More than 70% of Thailand's electricity is generated by gas.

The Thailand-Cambodia JDA on gas would have served to substitute Thailand's depleting gas reserves, support its bid to diversify its sources of gas supply and strengthen supply security which has been threatened by major shortfalls. In the past several months, Thailand has been rocked by frequent disruptions in natural gas supply which drove the country to the brink of a blackout while reflecting its vulnerability due to excessive dependence on natural gas. During that time, gas deliveries from the Yadana and Yetagun fields in Burma's Gulf of Martaban, and Bongkot and Arthit in the Gulf of Thailand, were halted.

The Thailand-Cambodia JDA would have delivered gas to Thailand at a lower cost and more quickly, thanks to the resources' proximity to the existing pipeline network already in place in Thai waters. Thailand would benefit more if the JDA gas saw the light of day. Given its strong dependence on gas for power generation, petrochemical, industries and automotive fuel, Thailand needs the gas more than the lesser-developed Cambodia does.

Linking the MoU to Thaksin and politics because the MoU was signed on June 18, 2001 when he was in power, in order to justify the MoU's termination, is not a fair statement. Govt spokesman Panitan Wattanayagorn's suggestion that Thaksin might share his considerable knowledge on the subject with Cambodia, is going too far with excessive political motive. The fact is, the MoU is merely a diplomatic paper outlining, in a few paragraphs, a broad framework for both sides to forge mutually-agreed terms for the JDA, leaving production details for later negotiation.

Furthermore, the MoU with Cambodia was originally proposed by Thai bureaucrats in charge of the Foreign, Mineral Resources and Energy ministriess, who were aware of the JDA concept that had been successfully adopted by Thailand and Malaysia in their 7,250-sqkm tract well before the Thaksin era. The JDA concept, which basically allows the two countries to share benefits arising from the area equally, was seen as a workable solution to quicken the pace of petroleum development, rather than struggle to redefine boundaries, which has proved to be no easy task even for long-time friendly neighbours.

It took more than a decade for Thailand and Malaysia to finalise terms for the JDA accord based on the MoU they initialled in 1979 and the gas from the once-disputed area has been flowing to the two countries for about five years now. Thailand and Cambodia really should leave the JDA issue out of their current diplomatic/political spat.

Boonsong Kositchotethana is Deputy Assignment Editor (Business), Bangkok Post.

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