Fiscal Regimes is one of the most important factors to be considered for investment decisions in oil and gas industry. Royalty Rate, Cost Recovery, Contractor Share, Domestic Market Obligation, Investment Credit, Signature Bonus, Production Bonus, First Trance Petroleum and Corporate Tax Rate have a significant effect on the investment decisions. The paper examines and compares the fiscal regimes in Australia, China, India, Indonesia and Malaysia. In order to analyze the advantages and disadvantages of each fiscal regime, the economic analysis of the same hypothetical fields with the applications of those different fiscal regimes are presented and discussed. Generic fiscal terms are used in the analysis since contractors usually can negotiate the special terms with governments. The information of this paper is useful for oil and gas companies around the world when they want to decide where in Asia Pacific Region they want to invest their money. They can compare which fiscal regime gives them the most favorable return of their investment. In addition, the information is useful for the governments when they want to assess their fiscal regime competitiveness compared to other fiscal regime in that region. In depth analysis on fiscal regimes of those countries is very important for oil and gas industry and it will add to the knowledge base of this industry. Conclusions are made of the effects of these different fiscal regimes on oil and gas company cash flow and profitability and how they affect company investment decisions in oil and gas industry and government policy. Introduction Asia Pacific is still one of the most attractive places for investment in oil and gas sector. Among countries in Asia Pacific, China, Indonesia, Australia, Malaysia and India are the largest oil and gas producers respectively (see Table 1). Being the largest producers countries, every country tries to attract companies from various aspect of investment. Fiscal term is one of the aspects for investment decision. Obtaining good terms in the global context is one thing, but nobody wants to negotiate the worst terms in a country even if these are relatively good terms. For many oil companies, an important part of the negotiations is to secure terms acceptable to the new potential partner. Knowing the market and what terms are realistic depends on a region's potential and factors. Most countries developing petroleum fiscal systems are opting for the Production Sharing Contract (PSC). Now, nearly half of the countries with the petroleum potential have a system based on the PSC. However, financial result could be the same as in royalty/tax arrangement. Economics depend primarily on division of profits or what is known as government/contractor take. Fiscal comparisons center on government/ contractor take. Contractor take is the percentage of profits going to the contractor or oil company. Government take is the remaining share. Division of profits is one of the most important benchmarks for comparing fiscal systems. It correlates directly with reserve values, field size thresholds, and other measures of relative economics. Detailed economic modeling using cash flow analysis is the best way to compare the fiscal terms for each country. Once cash flow is projected, the respective profit shares can be evaluated. Besides the profit share, the contractor receives revenue or production for cost recovery. Profit share combined with cost recovery is the total contractor entitlement.

Malaysia has introduced a shallow-water enhanced profitability term (EPT) production sharing contract (PSC) in the year 2021 to reward a PSC contractor with equitable returns reflecting the business risk and the opportunity to accelerate development and monetization. This study evaluates the attractiveness of the EPT against several fiscal terms adopted in southeast Asia, including Indonesia, Vietnam, Thailand, and Myanmar. This paper established an offshore shallow-water field development analogue project with a total production volume of 68 MMbbl, capital expenditure (Capex) of USD 530 million, predevelopment operating expenditure (Opex) of USD 36 million, variable Opex of USD 12.5/bbl, floating production storage and offloading (FPSO) rental of USD 61 million/year, and abandonment capital of USD 101 million. High, base, and low scenarios are considered for oil price per barrel as USD 70, 60, and 50, respectively, and production volume scenarios as 78, 68, and 58 MMbbl, respectively. These values with certain fiscal assumptions are input into a fiscal model engine for economic indicators [net present value (NPV), rate of return (ROR), and payback], revenue take, after-tax cashflow, and variables sensitivity calculations to evaluate base, optimistic, and pessimistic cases. In the base case, the attractiveness order of countries based on a higher-positive NPV at 10% and ROR are Malaysia EPT (NPV at 10% = USD 198 million, ROR = 30.4%), Indonesia PSC (2017) (NPV at 10% = USD 149 million, ROR = 28.3%), and Thailand Royalty and Tax (R/T; 1991) (NPV at 10% = USD 32 million, ROR = 14.5%). In the optimistic case, the NPVs at 10% are improved, ranging from Thailand (+271%), Myanmar (+247%), Malaysia (+151%), and Indonesia and Vietnam (+141%) as compared to the base case. In the pessimistic case, all the fiscal terms are unfeasible for ROR at 10%. Myanmar PSC (1993) yields above 10% ROR only when the production is at the base or high scenario with oil price at USD 70/bbl. Vietnam PSC (2013) is unfeasible for positive NPV at 10% even with high oil price under various taxes, including the windfall profit tax. Indonesia has a better NPV at 10% at a low oil price because of the progressive split that subsidizes the operator. Oil price and production volume are the top two sensitive variables except for Vietnam, where capital is the highest. The contractor take is higher in Malaysia, followed by Indonesia, Thailand, Myanmar, and Vietnam at base and high oil price. When the oil price is low, Indonesia generated a higher contractor take than Malaysia. Malaysia EPT is the only fiscal regime that can generate a contractor take that is higher than government take and stagnant around 55% against the 40% in Indonesia. In conclusion, Malaysia EPT provides a better investment return when the oil price is USD 60/bbl and above, while Indonesia gross split is more profitable when the oil price is low. This study provides insights on the potential investment returns by new EPT fiscal terms. The attractiveness and potential margin upside when the oil price is on the rebound paves the way for other southeast Asia fiscal terms.