ExxonMobil takes Bass Strait off the market

Dec. 7, 2020

ExxonMobil has abandoned the sale of its Bass Strait assets in Victoria after responses from potential buyers did not match the global major’s expectations.

The company’s 50% interest in multiple producing oil and gas fields along with shore-based production plants and infrastructure was put on the market in September 2019.

The company said at the time that it would be testing market interest for a number of its assets worldwide, including its operated producing assets in Australia, as part of an ongoing evaluation of its portfolio. It stressed that no agreements had been reached, no buyer identified, and no targeted price tag revealed.

Analysts speculated that one of the possible deterrents for prospective buyers might be the looming liabilities for decommissioning some or all of the aging fields. The company, in partnership with BHP, has been producing from Bass Strait for 50 years.

The major oil discoveries were made in the latter half of the 1960s into the early 1970s which catapulted Australia into oil self-sufficiency within a few years of being brought on stream.

Discoveries also included sizeable gas reserves which transformed Victoria from coal gas to natural gas as an energy source.

The fields, however, are now in steep decline.

Commenting on the withdrawal of sale notice, an ExxonMobil spokesperson said Nov. 27: “We believe the Gippsland basin and the Kipper (gas field) unit (in which ExxonMobil has 32.5% interest) are more valuable as part of our portfolio and we will continue to operate rather than divest.”

The company’s 50% partner BHP is still planning to sell after confirming in August that it too was looking to “withdraw from all its later-life assets, including Bass Strait, and turn its focus on higher value assets” (OGJ Online, Aug. 18, 2020).

BHP said Nov. 27 that it was continuing to assess its divestment plans for Bass Strait despite ExxonMobil’s abandonment of the sale process. In the meantime, the company plans to continue working with ExxonMobil to deliver gas and liquids to customers. It also stressed that the Bass Strait operations would continue as normal throughout sale efforts.

BHP originally took up the permits in the early 1960s, bringing in Esso Exploration (ExxonMobil) to be equal 50% interest holder and operator. Total value of the Gippsland basin joint venture was estimated by analysts to be $6-7 billion (Aus.).