BP Scraps 'Non-Competitive' Australian Project

UK major BP has taken the decision to stop exploration work in the Great Australian Bight (GAB), offshore South Australia, as it is no longer competitive with other projects in its portfolio, it said October 11. Following a review of its upstream strategy this year it decided to focus exploration on opportunities likely to create value in the near to medium term, which mostly means building on its existing upstream positions. 

"BP has determined that the GAB project will not be able to compete for capital investment with other upstream opportunities in its global portfolio in the foreseeable future," and had nothing to do with the prospectivity of the region or with the regulatory process. It has not received environmental permits for drilling, a year after submitting its first application to Nopsema, the regulator. It will now enter talks with the government on how to meet its drilling commitments.

BP's GAB acreage

(Credit: BP)

Claire Fitzpatrick, BP’s Managing Director for Exploration and Production, Australia, said the decision was "incredibly difficult and we acknowledge it will be felt across the South Australia region. We have made significant progress with preparations for drilling in the Bight with the support of communities and federal, state and local governments. We acknowledge our commitments and obligations and our priority now is to work with government and community stakeholders to identify alternative ways of honouring these.”

BP has also consulted with its joint venture partner, Statoil, which fully understood BP’s change in strategic direction and accepted BP’s decision. BP won exploration licences for four blocks in the Ceduna area of the GAB in January 2011. Seismic data was acquired in the area in late 2011-early 2012. Statoil acquired a 30% interest in the licences in 2013, BP remained operator with 70% interest.

William Powell