BP scraps plan to drill off Aus­tralia’s south coast

Kuwait Times - - BUSINESS -

Oil ma­jor BP has scrapped plans to drill for oil and gas off the south­ern coast of Aus­tralia be­cause it is too ex­pen­sive in the face of low oil prices that have prompted heavy cost-cut­ting across the sec­tor. The Great Aus­tralian Bight project has been con­demned by en­vi­ron­men­tal groups who say it would dam­age whale and sea lion breed­ing grounds, but BP’s with­drawal can only be viewed as a par­tial vic­tory for cam­paign­ers be­cause the com­pany and a num­ber of oth­ers still hold ex­plo­ration per­mits for the area.

BP said the project, in which it is part­nered by Nor­way’s Sta­toil, would not be able to com­pete for cap­i­tal in­vest­ment with other op­por­tu­ni­ties in its global port­fo­lio for the fore­see­able fu­ture.

“This de­ci­sion isn’t a re­sult of a change in our view of the prospec­tiv­ity of the re­gion, nor of the on­go­ing reg­u­la­tory process,” BP’s head of ex­plo­ration and pro­duc­tion in Aus­tralia, Claire Fitzpatrick, said in a state­ment. “It is an out­come of our strat­egy and the rel­a­tive com­pet­i­tive­ness of this project in our port­fo­lio.”

BP has cut its in­vest­ment bud­get dras­ti­cally this year to less than $17 bil­lion, com­pared with $23 bil­lion two years ago. Ex­plo­ration ac­tiv­i­ties have been hit par­tic­u­larly hard and a reshuf­fling of op­er­a­tions led to the de­par­ture of its ex­plo­ration chief four months ago.

An­a­lysts at RBC Cap­i­tal Mar­kets es­ti­mate that BP’s ex­plo­ration spend­ing will fall to $1 bil­lion this year, com­pared with about $5 bil­lion in 2013.

“This de­ci­sion con­tin­ues the trend in the sec­tor, with the ma­jors mov­ing away from fron­tier drilling and to­wards lower-risk, nearer-re­turn prospects,” RBC Cap­i­tal Mar­kets an­a­lyst Bi­raj Borkhataria said.

BP did not dis­close how much the project would have cost or what oil price it needs to make the project vi­able. Bench­mark Brent crude prices were trad­ing at less than $53 a bar­rel yes­ter­day, com­pared with more than $90 two years ago.

Shares in BP were vir­tu­ally un­changed at 1055 GMT, slightly out­per­form­ing a 0.1 per­cent decline for the sec­tor in­dex. BP was forced to re­vise its Bight plans late last year and was await­ing de­ci­sions by the Na­tional Off­shore Petroleum Safety and En­vi­ron­men­tal Man­age­ment Au­thor­ity on two wells this month and a broader en­vi­ron­men­tal plan by the end of the year.

The agency said yes­ter­day that it had yet to re­ceive a re­quest from BP to with­draw its ap­pli­ca­tion.

The Wilder­ness So­ci­ety, which has long fought to stop drilling in the Great Aus­tralian Bight area that also con­tains a pro­tected ma­rine park, yes­ter­day urged the fed­eral govern­ment to ter­mi­nate BP’s leases and can­cel all ex­plo­ration per­mits in the basin. “We should not be ex­pand­ing the fos­sil fuel in­dus­try into pris­tine treach­er­ous seas where the risk of spills is far greater than we’ve seen be­fore,” the so­ci­ety’s na­tional di­rec­tor, Lyndon Sch­nei­ders, said in a state­ment.

Oth­ers with ex­plo­ration per­mits in­clude Chevron Corp , Ka­roon Gas Aus­tralia and Mur­phy Oil in con­junc­tion with San­tos. Ka­roon, which won an ex­plo­ration per­mit only last week, de­scribed the Bight as Aus­tralia’s “most ac­tive and prospec­tive fron­tier oil ex­plo­ration prov­ince”. — Reuters

IS­TAN­BUL: Bob Dud­ley, BP Chief Ex­ec­u­tive of BP delivers a speech yes­ter­day dur­ing the 23rd World En­ergy Congress in Is­tan­bul. World En­ergy Congress in Is­tan­bul brings to­gether play­ers across the en­ergy sec­tor to dis­cuss a transformation of the sec­tor. — AFP

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