Thailand presents a unique opportunity for energy exploration and production. The country benefits from proven petroleum systems and relatively favourable offshore operating conditions in shallow waters. Mid-life oil fields offer potential to extend their lifespan through targeted infill drilling and step-out exploration. Additionally, there remain undeveloped oil accumulations, providing further opportunities for exploitation. With a steady stream of deals, including the exit of major international oil companies, the landscape is ripe for new entrants.
The business environment in Thailand is attractive due to the country’s favourable fiscal terms under its concession system. Under the Thailand I concession terms, operators are subject to a 12.5% royalty and a 50% petroleum income tax. The Thailand III terms offer even more flexibility, with royalty rates ranging from 5% to 15%, alongside the same 50% petroleum income tax and a progressive “special remuneration benefit” of 0-75% on windfall profits. Tax losses can be carried forward for up to 10 years, making it an enticing prospect for long-term investments.
Thailand also boasts an extensive local service industry that supports its regional oil and gas sector. Its refining capacity further enhances the viability of the oil market, with crude oil prices often tied to benchmarks like Brent and Dubai. Additionally, local demand for primary energy is steadily increasing, situating the country within a prime energy market in Southeast Asia.
Thailand itself covers a land area of 513,120 square kilometres, with a population of 70 million as of 2021. Bangkok, the bustling capital city, serves as the heart of this unitary parliamentary constitutional monarchy, currently under the rule of King Vajiralongkom (Rama X). The Prime Minister, Prayut Chan-o-cha, leads a country with a GDP of US$501.6 billion in 2020, and a GDP per capita of US$7,186 for the same year. Thailand is classified as a newly industrialised economy and is the second-largest economy in Southeast Asia. As a founding member of ASEAN, the country continues to play a significant role in the region’s economic development.
Thailand’s combination of favourable exploration conditions, robust infrastructure, and strategic location in Southeast Asia makes it a compelling prospect for energy companies like Valeura Energy seeking to expand their operations.
