"We are committed to further promote petroleum exploration for energy security," said Energy Minister Piyasvasti Amranand. At present, oil companies are operating on 40 exploration fields: 19 onshore and 21 in the Gulf of Thailand.

"Petroleum development will also generate revenues to the state," he said.

"Royalty fees in the past six months have reached Bt17 billion and as of the end of fiscal 2007, the fees could rise to Bt91.55 billion."

At present, the Energy Ministry is amending the petroleum law to include promotional incentives and to fix royalty fees for small fields or fields with low production output. The amended law would be clearer in terms of environment protection and drilling-rig removal.

The law would also quicken the exploration and production-licensing process.

The draft amendments are now being screened by the Council of State and the review is expected to be completed in May before it is forwarded to the Cabinet and the National Legislative Assembly.

Natural Fuels Department director-general Krairit Ninkhooha is positive that the new auction round will draw investors due to higher oil prices and more advanced rig technology, which has make it more worthwhile for exploration and production on small fields.

The previous auction round, involving 21 fields, will lead to an investment of US$85 million (Bt2.95 billion) in the next three years. In return for the licences, the state has earned a total of $90 million through royalty fees, scholarships and training funds.

Crude oil prices are now hovering above $60 per barrel. Light sweet crude for May delivery rose 31 cents to $62.14 a barrel on the New York Mercantile Exchange in mid-afternoon yesterday in Singapore. The June contract slipped 17 cents to $63.15.

Piyasvasti said fluctuations in oil prices were not unusual. Despite the continued increases in domestic retail prices, he insisted no subsidy would be implemented.

He attributed the fluctuation to the low production capacity of crude oil and finished oil. Whenever there is an unfavourable incident, such as violence in Nigeria or the Organisation of Petroleum Exporting Country agreement to reduce output, tight supply will create price fluctuations.

He is confident geopolitical tensions in Iran will not develop into a war but says it could encourage speculation.

"The crude oil price should move between $55-$65 for some time, but it could shoot up to $80 if the UN Security Council decides to impose a boycott on Iran, which could lead to the stoppage of oil production of 2.4 million barrels from the country," Piyasvasti said.

Under that circumstance, the Energy Ministry may come up with relief measures, probably through a cut in the contribution from retail oil sales.

For instance, at present, the Oil Fund collects Bt3.46 for every litre of octane-95 petrol. The Oil Fund's debt repayment could be lengthened from a year as a result.

However, he insisted there would be no price subsidy, because that would increase the Oil Fund's debts.