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Asian Oil Futures Point To Higher Crude Prices

Asian Oil Futures Point To Higher Crude Prices

Asian Crude and LNG futures…

BP Gives Up On Drilling Project In The Australian Bight

Great Australian Bight

BP has quit a US$600-million drilling operation in the Great Australian Bight. According to the company’s Australian managing director for exploration and production, Claire Fitzpatrick, the project was not in line with BP’s “strategic goals.”

Another reason for the withdrawal could be the strong public opposition to drilling for oil in the pristine Bight, and several regulatory delays, including two rejections from Australia’s National Offshore Petroleum Safety and Environmental Management Authority.

The Great Australian Bight, a marine reserve, had, according to BP, the potential to turn into a new Gulf of Mexico, so the company splashed millions on exploration and commissioning a platform while applying for a drilling permit with Nopsema. The regulator rejected BP’s plans twice, and repeatedly sought more information about its environmental protection mechanisms. The latest request for information came at the end of September.

In that request, Nopsema asked BP to amend its oil spill modeling and response plans, after they were found to not be up to par as per industry best standards by an Australian National University professor. According to the Guardian, Nopsema’s stringency was reinforced by a growing worry among environmental regulators about faulty bolts used in offshore platforms that could cause a major spill if the problem is not addressed quickly.

BP said in its official statement on the project suspension that its decision had nothing to do with Nopsema’s delays and rejections, and that it does not change the company’s view that the Bight is very rich in crude oil. However, the statement read, “It is an outcome of our strategy and the relative competitiveness of this project in our portfolio.”

Related: Oil Surges To One-Year High As Putin Backs OPEC Deal

The withdrawal from the Bight may have serious consequences for the economy of South Australia. “They made a promise to the Australian Government that they would spend nearly $1.4 billion on exploration in the Great Australian Bight when they tendered for these tenements and now, they withdraw,” Australian Treasurer Tom Koutsantonis said, adding that BP’s decision to withdraw was “bitterly disappointing”

Meanwhile, an Australian environmental group, is discouraging all other interested oil majors to follow BP’s lead and abandon all hope for the area, after estimating that a potential spill in the Bight would have severe economic consequences. According to the Wilderness Society, an oil spill in the Bight would destroy the local fishing industry, worth US$422 annually, along with regional tourism.

By Irina Slav for Oilprice.com

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