Report: ExxonMobil looking to offload Gippsland assets

Oil and gas major ExxonMobil is putting up for sale its ownership in the Gippsland Basin assets, offshore Australia.

According to Reuters, which cited a statement by Exxon, the oil company is looking to sell its 50 percent stake in the Gippsland Basin assets, located in the Bass Strait, off the state of Victoria. The other 50 percent is held by BHP.

The Australian media on Wednesday cited Exxon as saying: “ExxonMobil will be testing market interest for a number of assets worldwide, including its operated producing assets in Australia, as part of an ongoing evaluation of its assets…”

“No agreements have been reached and no buyer has been identified,” Exxon was cited as saying in the statement.

“Operations will continue as normal throughout the effort to sell the assets. Our priorities continue to be effectively meeting the expectations of our customers, employees and business partners while maintaining a consistent focus on safe and efficient operations.”

According to a fact sheet found on ExxonMobil’s website, the offshore installations in Bass Strait consist of 19 platforms and four subsea facilities. Production from the first platform started in 1969.

Tough sell?

Commenting on the ExxonMobil announcement, Wood Mackenzie’s research director, Angus Rodger, said: “ExxonMobil putting its entire Gippsland Basin upstream portfolio up for sale represents big news for the Australian upstream and gas market. As a pivotal producer on the east coast, the assets play a key role in supplying gas to Australia’s biggest market. As such, we would expect interest to be strong from domestic players that wish to gain greater exposure to rising gas prices, of which there are a significant number. That said, these are complex, mature assets.

“We believe this will lead to a far smaller pool of realistic buyers, who will have to get comfortable with the age of the assets, declining production and significant decommissioning liabilities. The fact that a previous effort to offload the Gippsland oil assets failed due to uncertainty over abandonment costs highlights how big an issue it will be, but also suggests any new operator would look to extend and increase production from the portfolio to delay the onset of decommissioning spend.”

‘Gas becoming a stranded asset’

Commenting on Exxon’s plans, environmental organization Friends of the Earth Melbourne said on Wednesday that the sale would send shock waves through the region and that it was hard to imagine any company wanting to buy oil and gas fields that are clearly in steep decline.

The organization further said in the statement: “Exxon’s exit shows that gas is becoming a stranded asset. It highlights the folly of encouraging continued or new investment in fossil fuels, and the need for a funded plan to transition workers away from old industries like oil and gas.”

The organization added: “The support for the gas industry being shown by the current state government demonstrates just how out of touch the Andrews Government is. It is essential that the state government intervene to support workers through the transition that is coming and that the company help fund this work.”

Offshore Energy Today Staff

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