Chevron has decided to drop its US$500-million exploration program in the Great Australian Bight off the coast of South Australia as low oil prices make the commercial viability of any potential discovery doubtful, the company said in a statement.
Chevron acknowledged that the Great Bight has great potential, but added that in the current price environment, other projects better deserved the capital that Chevron would have had to allocate for exploration in the frontier region.
The U.S. giant has become the second Big Oil player to quit the Great Australian Bight, after last year BP dropped its exploration plans there.
BP faced a lot of environmental opposition and pressure from local authorities to make one environmental assessment after another there, and now Chevron's exit from the Bight is seen by the local energy industry as a painful blow: exploration spending in Australia, both onshore and offshore, is at a 30-year low, according to Reuters.
Chevron, made a point of noting in its statement that their exit from the Bight had nothing to do with regulations. "This is a commercial decision and was not due to government policy, regulatory, community or environmental concerns."
The Great Australian Bight is a challenging place for oil and gas exploration because of its notoriously rough waters. It is also home to a great diversity of marine life, which is what has set environmentalists' sights on oil and gas companies with interests there. These interests are motivated by resources that Wood Mackenzie has estimated at up to 1.9 billion barrels of oil equivalent.
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The Australian Petroleum Production and Exploration Association lamented the lack of sufficient investment in Australia's energy resources following Chevron's statement, although it did acknowledge the challenging oil price situation.
For environmental groups, the news is excellent, and now their only target in the Great Australian Bight is Norway's Statoil, which last year acquired two of BP's exploration permits.
By Irina Slav for Oilprice.com
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