A study of petroleum fiscal system for undeveloped reserves in Thailand

Abstract

There are many undeveloped petroleum reserves in Thailand that raise the question on the economics of the field development. One reason is the efficiency of the petroleum fiscal regime that governs the share of the petroleum benefit between the investor and the host government particularly in the small petroleum field. Typically, the regressively of the petroleum system creates some bias on the development decision due to the increasing of the government take on the marginal petroleum field. This thesis studies Thai petroleum fiscal system by compare the current fiscal regime with others. By adjusting some elements of the system such as royalty rate, tax rate and Special Remunerator Benefit (SRB) for various cases to identify the effect of such tax elements to the return on both investor and Government. The progressivity and competitiveness of the proposed fiscal system to the existing system are examined using the standard measures such as Percentages of Government Take, Percentages of Contractor take, Percentages of cost to revenues, Net Present Value (NPV), Internal Rate of Return (IRR) etc. These efficiency, flexibility and economic competitive fiscal system are revised to encourage the investor for the undeveloped field investment.