As the upstream sector recovers from the 2014 oil price crash and resulting budget cuts, a number of South East Asian governments are adapting policies in the sector in the hope of capturing a share of new investment.

The most significant policy changes aimed at attracting new investment into the sector have been made by the Indonesian government. In 2017, it introduced a new fiscal regime, the gross-split PSA. Much of the government’s rationale behind the new regime centered on lessening the high regulatory burden caused by the need for expenditure approvals and audits under the cost recovery PSA.

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Thailand has also revised its fiscal and regulatory regime as it looks to attract investment. However, the current focus is on the planned tender of concessions containing the country’s largest gasfields, Bongkot and Erawan, where existing licences expire in 2022 and 2023.

South East Asia – Licensed Blocks by Country, 2010–2017

Source: Upstream Analytics                                                                                                                                                                                     © GlobalData

Recent policy changes to stimulate the sector in the region have not been limited those countries with high levels of E&P activity. In August 2017 Cambodia signed a revised contract with KrisEnergy for Block A to allow the development of the Aspara field, set to be the country’s first development.

Meanwhile, the Philippines already offers attractive terms, but now hope to stimulate exploration activity by allowing explorers to nominate areas for licensing through an expedited process.

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Policy decisions over the next year will also be crucial to the development of Myanmar’s upstream sector. Although discoveries by Woodside over the past two years have boosted prospects, many other operators have notified the government of their decision to relinquish blocks licensed in the 2013 offshore round, or are reportedly planning to do so.

With the country’s fiscal terms less than competitive for frontier exploration, particularly in deepwater areas, the government is likely to have to revise the regime if it is to attract new exploration drilling.