Bangchak Group Establishes Strong Foothold in E&P through OKEA, Norway A Prototype for Expanding Investments to Enhance Energy Security, Integral to Long-term Strategy

Bangchak Group succeeds in upstream business expansion from investments in natural resources in Norway, a global leading country in environmental conservation, with an exploration and production industry internationally renowned for its high standards, and carbon taxes to reduce GHG emissions. In the first half of 2022, 30% of Bangchak Group’s EBITDA was attributable to exploration and production operations by OKEA ASA, of which the company is a major shareholder (45.7%), citing the success as a prototype for expansion of petroleum exploration and production business to enhance energy security in tandem with clean energy transition.

Chaiwat Kovavisarach, Group Chief Executive Officer and President, Bangchak Corporation Public Company Limited, as Chairman of OKEA ASA, Norway, the operator of petroleum and natural gas exploration and production company listed in the Oslo Stock Exchange, stated that energy security is integral to Bangchak Group’s long-term strategy, of which petroleum exploration and production is a critical component. OKEA is the flagship in achieving this mission, and is a major pillar of Bangchak Group, with constant growth, especially during the year’s high global fuel prices. In the first half of 2022, OKEA recorded revenue from the sales of crude oil and natural gas totaling THB 10,239 million, up 148% from THB 4,133 million in the previous year, and EBITDA increase to THB 7,833 million, up 288% from the EBITDA during the first half of 2021, incurred from increasing crude prices from tight supplies as a result of the ongoing Russia-Ukraine conflict, and increased global demand as COVID-19 control measures are lifted in many countries.

Presently, OKEA has four oil fields in Norway, namely, Draugen (44.56% stake), Gjoa (12% stake), Yme (15%), and Ivar Aasen (2.77%), together accounting for, in the part of OKEA, about 20,000 barrels of oil equivalent daily. OKEA began as an operator of the Draugen oil field after Shell, and continually develops new oil fields which will increase OKEA’s petroleum production to about 25,000 barrels of oil equivalent per day by the end of the year. It also successfully enhanced the efficiency of production of the Draugen field expanding its lifespan from the initial forecast of 2027 to 2035, applauded by the Norwegian Ministry of Petroleum and Energy. During the first half of 2022, OKEA production consisted of 61% crude oil and 39% natural gas, the latter being a critical component of energy transition.

Norway has the highest number of electric vehicles per capita in the world with all domestic energy coming from clean energy, while fossil-based energy is produced entirely for export. The country is at the forefront in its preparedness to achieve its Net Zero targets, where it plans to reduce greenhouse gas emissions by 50 – 55% by 2030 and become a low greenhouse gas emission society by 2050. At present, a carbon tax, which helps to reduce carbon dioxide emissions, costs Euro 80 per metric ton of carbon dioxide equivalent, which may increase to as much as Euro 200 per metric ton of carbon dioxide equivalent by 2030, prompting many Norwegian energy businesses to maintain production standards with the lowest possible greenhouse gas emissions.

Chaiwat added “natural gas and oil will continue to be the crucial source of energy for the world for many decades to come. So, how do we coexist with fossil fuels for a sustainable world? Bangchak therefore put high emphasis on balancing the energy trilemma; Energy Security, Energy Affordability, and Environmental Sustainability. Drawing experience and skills from its business models from this prototype investment in Norway as a platform for expanding investments in the exploration and production business, to enhance the organizational stability of Bangchak Group throughout the supply chain.”