Developing an effective licence round strategy
Head of Upstream Consulting, APAC
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Our tried and tested approach focuses on analysing seven key areas:
1. Resource development roadmap
Each country should think about the type of investment being attracted and whether it is aligned with the overall objectives of the licence round. Understanding what you would like to achieve in each licence round in the short, medium and long term should be the starting point of all licence round considerations.
2. Licensing structure and frequency
Options will depend on the objectives a country would like to achieve and a number of other factors such as the maturity of the sector, success or otherwise of previous approaches and availability of information. A country could opt for regular rounds, an open door policy, non-regular rounds or a mixture of these for different types of opportunities.
3. Bidding criteria
A key part of the licensing process is the bidding criteria. We assess whether the bidding criteria are aligned with the country's overall objectives. Another important question is whether minimum commitments and weighting of technical and commercial factors are aligned with the prospectivity, attractiveness and risks of the opportunities offered.
4. Process and timelines
The right processes could potentially encourage more interest. We look at the appropriate number of stages, as well as the time provided to assess opportunities and to develop bids.
5. Operator and non-operator requirements
Requirements imposed on operating companies can have an impact on whether a company will want to invest in your country. Any requirements have to balance the need for technical, financial, environmental and local commitments with the opportunities on offer.
6. Acreage offered
There are often many decisions to be made regarding the acreage to be offered. This includes the size of blocks, number of blocks, basins of the blocks . Further, decisions will have to made regarding the offering nominated, recycled or relinquished blocks.
7. Data availability
Some countries provide free and open access to all bidders, while others charge a fee and only offer data packages to pre-qualified bidders. There are various permutations, but the approach selected by a regulator will have to be aligned with the following factors:
- The availability of data
- The maturity of the basin
- The perceived prospectivity of the opportunities
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Joshua Ngu, Principal Consultant, Asia Pacific