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Abstract: The Evaluation of New Business Opportunities in SE Asia
For more than a century Shell has been active in all aspects of the petroleum value chain in SE Asia. Conventional wisdom considers most basins in SE Asia mature with little exploration upside. Shell does not share this belief. In the past 4 years, Shell has evaluated more than 1110 exploration and production opportunities worldwide; 186 in SE and Australasia alone.
High level opportunity evaluation methodologies hinge on the recognition of new and existing plays, basin analogues and the use of field size distribution plots generated from public domain and Shell data in the region. These public data, together with extensive Shell internal data on a regional and basin-wide basis are used for quick opportunity evaluation and the recognition of existing, and potentially, new trends and plays. Use of petroleum vendor software for quick evaluation of economic attractiveness allows most opportunities to be evaluated quickly and consistently. Examples of regional play methodologies are presented for a producing basin and greenfield basin analogue exploration.
New opportunities are evaluated and ranked on a portfolio matrix by key strategic themes and by financial, value and risk attractiveness parameters. The position on the portfolio matrix determines if an opportunity is matured. Regretfully, most of the current SE Asian E&P opportunities do not rank favourably due to the current lack of materiality and poor fiscal terms to attract investor capital. Even with this as the case, Shell does understand and appreciate the fact that considerable remaining upside volumes potentially remain; particularly in new, yet to be defined plays and in potential emerging basins.
How can governments and industry work together to attract and retain increasingly competitive global investment capital? Several challenges both for industry and governments are key. Industry challenges include local understanding, sustainability and long term relationship issues. Government challenges revolve around realistic contract terms, fiscal flexibility and incentives to entice shrinking global exploration investment capital. Challenges for both parties are flexibility and creativity in new deals that yield mutual benefits.
Shell continues to invest in its existing SE Asian assets and will continue to entertain and evaluate all new business opportunities in the region. Coupled with our extensive Far East knowledge, experience and databases, we wish to selectively acquire the most attractive opportunities and to access potential new plays and sources of equity oil and gas that will enhance and add value our portfolio. Shell will continue to strive to be considered the preferred partner for new and attractive E&P opportunities in SE Asia.
Presented at: 2003 South East Asia Petroleum Exploration Society (SEAPEX) Conference, Singapore, 2003
Acknowledgments and Associated Footnotes
1 Jeffrey J. Lobao: Shell International E&P, The Hague, The Netherlands
Copyright © 2016 by Southeast Asia Petroleum Exploration Society (SEAPEX)