ECONOMICS OF PETROLEUM EXPLORATION OFFSHORE AUSTRALIA AND SOUTHEAST ASIA

Abstract

The aim of this paper is to assess the economic attractiveness of exploring for crude oil offshore the North West Shelf of Australia by comparison with selected areas offshore Indonesia, Malaysia, Vietnam and the Philippines. In order to do this, the paper examines the technical, quantifiable factors which affect offshore petroleum exploration acreage acquisition decisions at the country level. These factors are historical prospectivity, costs of field development and fiscal regime. Other factors such as political, macro-economic and business risks are not considered.

The paper concludes that there are significant differences between the countries as indicated by these measures. Past exploration in the Barrow/Dampier area of the North West Shelf of Australia has shown high levels of success by comparison with the other countries. This relatively high success rate coupled with comparatively low costs of field development and lenient fiscal regimes makes the economics of exploration on the North West Shelf favourable by comparison with those selected areas in the other countries considered.