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Its stake in Yetagun was going to have very little effect on overall profitability, but a consumer boycott of its retail gasoline stations might.

 

The Malaysian state-owned oil firm Petronas bought part of Texaco’s stake while Premier also increased its shareholding and took over as operator of the project. There were to be more problems ahead.

 

Thailand Reconsiders

 

In July 1998, with Yadana on-stream but the Ratchaburi power station—which was to use much of the gas—still under construction, PTT tried to amend its payment obligations. At first the consortium refused, but PTT hit on a technicality that it could use to threaten litigation over the validity of the contract; the stated heating value of the gas in the contract was 715 British Thermal Units per cubic foot, but the gas coming to Thailand was only 712 BTU/cf. The contract was amended to allow the Thai firm to pay for the gas first and then offtake it later. The pricing of the gas was to remain unchanged through 2006, when it could be renegotiated. Meanwhile, Premier was having difficulties.

 

The small British oil firm was undercapitalized and unable to talk any banks into providing it with finance for the Yetagun project. Petronas and US firm Amerada Hess both took 25 percent stakes in the ailing British company to bail it out. In 1999 Petronas strongarmed Malaysia’s Rashid Hussein Bank to give Premier a $158 million loan.

 

Yetagun was completed on time, but again PTT wasn’t ready for the gas and again negotiated to be allowed to pay first and offtake it later. Then Premier, apparently bowing to pressure from the British government, announced in September 2002 that it was selling its Yetagun stake to its consortium partners. The deal was completed a year later and Petronas took over as operator.

 

At the end of the day, Thailand got expensive gas and the Burmese government got its cut of the proceeds.