ExxonMobil handing over reins of Australia’s legacy offshore asset to Woodside

Australia’s oil and gas giant Woodside Energy has signed a deal with the Australian subsidiary of U.S.-headquartered energy major ExxonMobil to assume the operatorship of assets situated off Victoria’s Gippsland coast.

After striking what it says is a historic agreement with ExxonMobil, Woodside is slated to become the operator of the Bass Strait assets, described as Australia’s first major offshore oil and gas development. Over 11 trillion cubic feet (Tcf) of pipeline gas and over 5 billion barrels of oil have been produced since first production in 1969.

Bass Strait holds what is said to be Australia’s first offshore well, drilled in 1965, leading to the discovery of the Barracouta gas field. The first offshore oil field, Kingfish, was discovered two years later. To this day, it remains the largest oil field discovered in Australia, according to ExxonMobil.

Based on the 2024 Bass Strait decommissioning report, assets in Bass Strait comprise 421 wells, 19 platforms, six subsea facilities, and more than 800 kilometers of subsea pipeline connecting them to onshore processing facilities at Longford and Long Island Point. The former was commissioned in 2017.

These form part of the Gippsland Basin Joint Venture (GBJV) and the Kipper Unit Joint Venture (KUJV). Woodside and ExxonMobil Australia’s subsidiary Esso hold a 50% participating interest in the GBJV and a 32.5% participating interest in the KUJV, with Mitsui holding the remaining 35% in the latter. 

Once the deal is finalized, which is expected in 2026, the duo’s equity interests in the assets and current decommissioning plans and provisions will remain unchanged. The Australian player will assume operatorship of the offshore assets, the Longford Gas Plant, the Long Island Point gas liquids processing facility, and associated pipeline infrastructure. 

Woodside’s Executive Vice President (EVP) and Chief Executive Officer (COO) Australia, Liz Westcott, said: “As a proudly Australian company, Woodside supports essential domestic energy needs in both Western Australia through the North West Shelf, Pluto and Macedon operations, and on the east coast through its equity participation in Bass Strait. 

“Taking operatorship of Bass Strait demonstrates Woodside’s continued commitment to meeting Australia’s domestic energy demand while maximising the value of existing infrastructure.”

As part of the deal, ExxonMobil’s workforce will transfer to Woodside. Being in charge of asset planning and execution activities, the Australian player intends to pursue a value maximization strategy by upping production and improving reliability.

In line with this, Woodside claims to have identified four potential development wells within the existing contingent resource opportunity set, which it believes could deliver up to 200 petajoules of sales gas to the market. These can be developed solely through the Bass Strait infrastructure, subject to further technical maturation and a final investment decision (FID).

ExxonMobil Australia Chair Simon Younger stated: “After operating the Gippsland Basin Joint Venture for more than 50 years, we are proud to be handing over the reins and transitioning our highly experienced Bass Strait workforce to our valued partner Woodside, a world-class operator. We look forward to working with Woodside as it continues to maximise Gippsland Basin production.” 

Natural gas production from Bass Strait currently supplies approximately 40% of Australian east coast domestic gas demand, making it the largest supplier into the Eastern Australian domestic gas market. Woodside believes the project holds a portfolio of contingent and prospective opportunities, primarily from deeper, acid gas resources.

The Australian player plans to invest in delivering additional gas, including additional development from the Kipper field and advancing funding decisions for the Turrum field. Announced in February, the Kipper 1B project is expected to deliver more gas to the market ahead of winter 2026.

Seeing that Bass Strait holds so many mature assets, several offshore facilities have ceased production due to field depletion following decades of activity. More specifically, the aforementioned decommissioning report suggests 13 of the platforms, four subsea facilities, 26 pipelines, and around half of all wells no longer produce oil and gas.

In addition to taking the operating role in this case, the Australian player is also divesting some assets as part of its portfolio optimization strategy. One of the most recent deals was the finalization of the divestment of its Greater Angostura assets offshore Trinidad and Tobago to Perenco.

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