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What Killed The Oil Price Rally?

What Killed The Oil Price Rally?

A bearish report from the…

Statoil Takes Over Great Australian Bight Oil Exploration From BP

Offshore

Norway’s Statoil has announced an announced with BP to take over exploration for oil and gas in four blocks in the Great Australian Bight. The agreement, approved by the Australian National Offshore Petroleum Titles Administrator, has seen BP transfer its 30 percent in the EPP37 and EPP38 blocks, and its 70-percent interests in EPP39 and EPP40.

The Great Australian Bight is an environmentally sensitive region—a marine reserve with whale breeding grounds—and oil exploration there has ran into environmental opposition. BP’s interest in the area gained media attention in the spring of 2016, when Australian media reported that the British giant, along with Chevron and Statoil are eyeing some US$75.3 billion (A$100 billion) worth of oil. According to Wood Mackenzie, the Great Australian Bight may contain 1.9 billion barrels of oil equivalent.

In September last year, however, BP said it would suspend exploration in its license blocks in the area because of unfavorable economic conditions. In addition to the economic environment, BP saw NOPTA reject three environmental safety plan proposals for the Bight. What’s more, as the Australian noted earlier in the year, oil exploration in the Bight has not been particularly successful in the past due to rough seas and a high failure rate in exploration: up to 90 percent.

Related: Unmasking Nigeria’s Oil Cartel

Statoil, which was BP’s minority partner in one field in the EPP39 block, Stromlo, has a much better environmental track record than BP, but is likely to attract the attention of environmentalists as well. The company’s Australian country manager, Jacques-Etienne Michel, said in this respect that “Over the coming months, we will engage in dialogue with a wide range of stakeholders, including the South Australian community.”

In its announcement of the deal, Statoil said that it is optimistic about the oil reserves contained in the four blocks, saying “there could be an active petroleum system within our permit area,” and preparing for exploratory drilling.

By Irina Slav for Oilprice.com

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