Oil, gas assets for sale?

WITH ExxonMobil planning to sell off billions of dollars of assets globally, speculation is again growing as to whether it will dispose of its Gippsland Basin oil and gas assets.

The Australian newspaper last week flagged the possibility that Beach Energy, an oil and gas exploration and production company based in Adelaide, might be interested in buying assets.

Questioned about the newspaper report by the Gippsland Times, an ExxonMobil spokesperson simply said the company did “not comment on rumours and speculation”.

In March US-based ExxonMobil chairman and chief executive Darren Woods confirmed plans to sell billions of dollars in assets, the energy giant forecasting it could generate $15 billion in cash through to 2025 by selling assets.

Mr Woods said Exxon was reviewing its global portfolio for divestment opportunities, and would prune assets that didn’t fit its strategic priorities, adding the company would look for tactical opportunities to offload assets at good value.

Back in June 2016, joint venture partners ExxonMobil and BHP confirmed they had their stakes in Bass Strait crude oil up for sale.

At the time the offshore fields being offered for sale included Perch, Dolphin, Seahorse, Tarwhine, Kingfish A, Kingfish B, West Kingfish, Fortescue, Halibut, Cobia, Mackerel, Blackback and Flounder, and associated platforms.

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

They had planned to retain all the major gas production operations, both the offshore fields and the onshore production plant at Longford.

However in February last year there was a change of heart, following a jump in oil prices.

BHP and ExxonMobil said they would hold onto their ageing oil platforms and fields in Bass Strait, an ExxonMobil spokesman saying “we are committed to our Australian operations and ensuring

the safe and reliable delivery of oil and gas to our customers”.

Now with new ExxonMobil Australia chief Nathan Fay in the chair, speculation has again arisen that ExxonMobil will not just sell off its share of Gippsland Basin oil assets, but gas as well.

The Australian last week reported that JP Morgan Analysts had noted Gippsland assets were a clear target for Beach Energy.

“We believe the Gippsland Basin Joint Venture assets would be appealing, given the strategic importance of the Longford gas plant to Victoria and NS W gas supply,” JP Morgan noted.

The Australian reported the assets could cost up to $3.2 billion, and that ExxonMobil had been approaching investment banks “about options for its Gippsland Basin Joint Venture”.

“Speculation is emerging in the market that its 50 per cent stake in the asset it owns with BHP Billiton will soon be placed on the market following the investment banker discussions, with an adviser likely to be appointed soon,” the article stated.

“Some believe BHP may also sell its interest in the project, with the resources powerhouse viewing the project as too old and too small to retain in its portfolio.”

It all adds up to uncertainty for local workers, who are nervous about who they will be working for in the future, or if their jobs are secure.

One local employee told the Gippsland Times all the speculation was worrying.

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.

This year is the 50th anniversary of the Gippsland Basin Joint Venture.

The joint venture supplies between 40 and 50 per cent of the east coast’s domestic gas demand.

Beach Energy was approached for comment.