Joint venture divests from Bass Strait oil

JOINT venture partners ExxonMobil and BHP have confirmed they have their stakes in Bass Strait crude oil up for sale.

The offshore fields being offered for sale include Perch, Dolphin, Seahorse, Tarwhine, Kingfish A, Kingfish B, West Kingfish, Fortescue, Halibut, Cobia, Mackerel, Blackback and Flounder, and associated platforms, which produce about 19,000 barrels of oil equivalent a day of production.

The licences also offer exploration potential in an oil-prone zone and smaller undeveloped gas fields and older, non-producing gas facilities.

After details were published in metropolitan media outlets on Wednesday, Esso called a meeting with workers at Longford to inform them of its plans.

It is understood Exxon also has the site of its Melbourne headquarters at Southbank up for sale after reducing staff numbers, with speculation that the company could move its headquarters to Perth.

With declining oil reserves, the joint venturers are planning to divest much of their crude oil interests in Bass Strait, saying they will focus on the substantial reserves of gas.

According to the Financial Review, its sources estimate the assets being offered by the joint venturers may fetch several hundred million dollars, although the fields are in decline and have limited growth.

It also noted the list of potential bidders had been thinned by the downturn in oil markets, which had turned players such as Santos and Origin Energy into asset sellers rather than buyers.

The joint venturers will retain all the major gas production operations, both the offshore fields and the onshore production plant at Longford.

The Australian reported interested parties could include smaller players keen to chase smaller extension and expansion opportunities in the exploration and development ground, or those that believed they could operate at a lower cost.

“If value is not seen by those buyers, it could attract services contractors that think they could profit by decommissioning the 10 platforms linked to the sale, which are approaching the end of their lives,” The Australian speculated.

The joint venturers have operated oil fields in Bass Strait since the 1960s after they drilled the country’s first offshore well in 1965, reaching peak production of about 500,000 barrels a day in the 1980s.

The Australian Workers’ Union has attacked Exxon-Mobil over the news it may “quietly pull the plug” on Bass Strait after more than 50 years, without forewarning workers and the communities which had served it. 

AWU Victorian secretary Ben Davis said it was “disturbing in the extreme” that business pages of major media on Wednesday carried a story that Exxon-Mobil was looking to sell declining oilfields, along with some exploration and development assets in the strait. 

“At the very least, the workers who have built their lives around employment with Esso, and the communities that have served it, deserve to be given the nod before a quiet leak to media,” Mr Davis said. 

“It brings into sharp contrast the David and Goliath nature of the employment relationship.” 

Mr Davis said Esso workers offshore and at Longford, Barry Beach and Long Island Point had been in negotiation towards new Enterprise Agreements for more than 18 months, with the multinational giant throwing legal obstacles in the path at regular intervals. 

“It is not appropriate for a multinational company to use its might to overpower and overcome community and worker rights,” he said.

“This latest announcement, released quietly as it was, could be interpreted as another attempt to keep people in line. 

“Exxon Mobil may not have right on its side, but it certainly has resources.” 

Mr Davis said the corporation began operations in Bass Strait in 1964 and had the distinction of being the longest tail oil asset in the Exxon Mobil stable. 

“By any standard of decency, the community and the Esso workforce should be briefed at every step of what could be a challenging, and for some, a devastating time,” Mr Davis said. 

The Gippsland Times submitted a list of questions to ExxonMobil yesterday morning, including what projects the proceeds of the sales would be used to fund, what the sales would mean for offshore and onshore jobs and whether it was considering relocating its Melbourne headquarters to Perth.

Exxon Mobil did not address those questions, but said it continually reviewed its global assets for their contribution towards meeting the company’s operating needs and financial objectives, as well as their potential value to others.

“We are seeking to identify third parties with proven experience and strength to operate and capture the remaining potential in these licences,” it said in a statement.

“Gippsland Basin Joint Venture will retain ownership and operation of the remaining offshore fields and onshore facilities.”