How to make upstream licensing work

The hunt for new upstream investment across Asia-Pacific has never been more competitive. The good news is that many explorers are refocusing on acreage reload, partly in recognition of exploration’s role in a delayed energy transition, and partly to reinvigorate current portfolios. But budgets are tight, and companies are seeking ‘advantaged’ opportunities with the potential for rapid value creation.

The first step for any country obtaining upstream investment is getting explorers interested in the country’s remaining exploration opportunities, typically through block licensing. But with many rounds being launched across Asia and elsewhere, how do you stand out?

Prospectivity, or the perception thereof – is a core element in any successful round, and explorers are unsurprisingly drawn to the latest discovery hotspots, but it is not the only factor. Highlighting the possibility of rapid payback – through infrastructure, market access or fiscal policies, for example – can also tick a lot of boxes. Regulators must offer investors a well-tailored - and well-marketed - package to attract attention in a crowded field.

One of the most successful countries in recent years at attracting new exploration interest has been Malaysia. Most of its active acreage has been licensed over the last few years and over US$1 billion of exploration spend has been secured through to 2027. Examining its ‘playbook’, we see some key strategies that proved effective in appealing to explorers. The cornerstones are:

1. Data access and transparency: Explorers need data to make decisions, so the more the better. In a competitive landscape, offering more data in new ways makes a difference.

2. Basin studies: Invest in new seismic campaigns to drive interest in new/old areas, then make the results widely available, ideally at minimal cost.
3. Fiscal reforms: Listen to investor feedback and improve terms, time to payback etc… but don’t tweak so much that it impacts stability.
4. Marketing: Actively promote the round and reach out to the explorers you want - don’t wait for them to come to you – with the opportunities that suit them best. Success comes not from how many blocks are awarded, but who they get awarded too, and the work commitments they bring.