ExxonMobil to sell share in upstream assets in Australia’s Gippsland basin

ExxonMobil Corp. is looking to sell its 50% stake in the Gippsland basin oil and gas development in Australia’s Bass Strait as part of a broader review of its portfolio of assets around the world.

ExxonMobil Corp. is looking to sell its 50% stake in the Gippsland basin oil and gas development in Australia’s Bass Strait as part of a broader review of its portfolio of assets around the world.

The assets, which ExxonMobil subsidiary Esso Australia owns in a joint venture with BHP Group, include 19 offshore platforms, the Longford and Long Island Point plants, associated infrastructure, and production fields. The joint venture has long been the mainstay oil and gas supplier for southeastern Australia, but output is in decline.

“ExxonMobil putting its entire Gippsland basin upstream portfolio up for sale represents big news for the Australian upstream and gas market,” said Angus Rodger, research director of Wood Mackenzie.

“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.”

Rodger added, “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.”

More in Companies