BP, Chevron to invest $116M on exploration in Australia after Bight exit

Oil and gas majors BP and Chevron have committed to investing a total of $116.5 million in oil and gas exploration activities in Australia, with at least half directed to projects in South Australia with a view of increasing energy supplies in the state and south-eastern Australia. The commitment follows the two firms’ cancellation of the Great Australian Bight drilling plans in the past three years.

The Great Australia Bight – Image by Nachoman-au / Wikimedia – Shared under CC BY-SA 3.0 license

This was shared in a joint statement on Thursday issued by Minister for Resources and Northern Australia Matt Canavan and South Australian Minister for Energy and Mining Dan van Holst Pellekaan.

The announcement followed the conclusion of Good Standing Agreement negotiations with both parties after their decisions to cease petroleum exploration in the Great Australian Bight.

Minister Canavan said: “BP and Chevron ceased their programs of exploration in the Great Australian Bight in 2017 and 2018 respectively. Australia’s offshore oil and gas policy ensures that companies which commit to a program of exploration deliver on that commitment under the Government’s Good Standing Agreement policy…In rare cases where commitments are not met, companies are encouraged to re-direct exploration investment within Australia.”

“This is an important policy that maintains the exploration investment pipeline in Australia, supporting new petroleum discoveries and our future energy security and I welcome these commitments from BP and Chevron.”

Minister for Energy and Mining Dan van Holst Pellekaan said he was pleased the Australian Government supported his request that half of the Good Standing Agreement be discharged in South Australia.

“It is excellent news for the South Australian resources sector that almost $60 million will be invested in our state as a result of the Good Standing Agreement,” Minister van Holst Pellekaan said.

He added: “This investment will help tap the immense promise of South Australia’s resources sector driving job creation, investment and royalties in South Australia. Australia’s offshore oil and gas policy ensures that companies who commit to a program of exploration deliver on their investment commitments.”

Both companies now have three years to deliver on their investments, with BP set to invest $40.6 million by October 2022 and Chevron to invest $75.9 million by September 2022. Both parties are finalizing contractual negotiations for a range of regional studies with third party proponents.

BP, Chevron, Karoon out. Equinor pressing ahead

Oil companies’ attempts to drill in the Great Australian Bight area have been under scrutiny in the last couple of years. Environmental groups like Greenpeace and political party Australian Greens have hampered oil companies’ plans for the Bight, claiming that drilling in the area containing a marine park would threaten marine life, fisheries, and eco-tourism operators.

Back in October 2016, BP gave up on its drilling program in the Bight, citing a new upstream strategy with a focus on opportunities likely to create value in the near to medium term as the reason behind its abandonment.

A year later, in October 2017, Chevron also ditched its Great Australian Bight exploration program due to its inability “to compete in the current low oil price environment.” Chevron denied that its decision had anything to do with the government policy, regulatory, community or environmental concerns, pointing out that it was a commercial decision.

Just last month, the Australian oil company Karoon relinquished WA-314-P in the Bight saying the company “listened to our broader stakeholder groups and have initiated actions to relinquish EPP46 in the Great Australian Bight.”

Norwegian oil company Equinor is still there, and despite the public pressure, and some recent setbacks with the environment plan, is planning to drill its Stromlo well.

The Australian offshore safety body NOPSEMA has earlier this week accepted Equinor’s environment plan for exploratory drilling in the Great Australian Bight. This still doesn’t mean Equinor is allowed to begin operations. It needs two more approvals before the activity can begin.

Offshore Energy Today Staff

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