Stepping on the gas: are Asia Pacific governments doing enough?

Asia Pacific is set to experience a gas supply crunch. Graham Kellas, senior vice president for global fiscal research, asks how governments in the region can adjust their policies to create a more favourable investment climate.

APAC headed for a gas supply crunch

APAC is fast evolving to become a hotspot for LNG and natural gas. Demand is set to rise rapidly in the next decade, particularly in China. At the same time, we expect indigenous supply to decline over the next 10 years, while investment in regional gas infrastructure has fallen. To meet the growing demand for gas, China and India will need to rely even more heavily on imports. Meanwhile, countries that have traditionally exported gas will be under pressure to divert production towards domestic markets.

What can governments do to boost regional investment?

Many countries are struggling to attract investment and interest from international oil companies (IOCs) has been muted in recent licensing rounds. Geological prospectivity and the cost of getting the gas out of the ground are the primary drivers of value creation. But governments also have an important role to play in determining how attractive a country is as an investment destination. Policy decisions on gas pricing, fiscal terms, domestic market obligations and state equity can have a significant impact on investment decisions.

So how attractive are APAC countries for foreign investors? And where could improvements be made? We’ve taken a closer look at gas policy across four key areas in 13 countries across the region.

Which country is most attractive for gas investors?

We’ve ranked the leading APAC gas importers and exporters against four parameters:

• Pricing
• Fiscal terms
• Domestic market
• State equity

There is good news for investors; most APAC countries are making changes so that gas policies are more attractive. Fiscal terms, prices and access to markets and infrastructure have been improving across the region, but we’ve yet to see an increase in IOC interest.

Download the full report to learn where governments could do more, and what lessons can be learned from other projects in the region. Fill in the form on this page to get your complimentary copy.