Abstract

The authors look at the availability of risk capital for exploration, development and acquisition in the energy sector, the regions of interest and the sources with a focus on funding the smaller acquisition and start-up ventures (US$20–50 Million), and the opportunities and issues arising in S.E. Asia.

Risk capital for the energy sector, where the liquidity is difficult and there is a significant level of perceived business risk has been a scarce commodity over the last few years. Initially investment was avoided because of low energy prices (there are few contrarians), then capital diverted into more attractive returns, in the early euphoria of the new economy and finally the compounding negative effects post September 2001.

The paper discusses the changed environment of northern hemisphere and regional capital sources, particularly the state and appetite of mezzanine and private equity funds. The authors review the track record of private and start-up funding in Asia with comparisons to other sectors leading to a discussion of the approaches that are more likely to be effective in fund raising.

In this context, the fiscal and legal structure of participation in the upstream assets in SE Asia is reviewed briefly with an analysis of possible structural modifications that may make the sector more attractive to smaller foreign companies and the capital providers.

Presented at: 2005 South East Asia Petroleum Exploration Society (SEAPEX) Conference, Singapore, 2003