Equinor dumps plans for Great Australian Bight Oil

Norway’s Equinor has become the latest energy giant to walk away from plans to drill for oil in the Great Australian Bight.

Equinor has joined BP and Chevron in walking away from oil projects in the Great Australian Bight. Picture: iStock

Energy giant Equinor has abandoned a controversial campaign to drill for oil in the ecologically sensitive Great Australian Bight in a major victory for environmental groups, with the Norwegian producer blaming the poor economics of the South Australian project for its decision to quit.

While Equinor had been expected to to kick off drilling later this year after winning environmental approvals in December, the company followed oil majors BP and Chevron in prior years in citing the high costs of the project.

A review of its exploration portfolio found it did not stack up financially with other global energy projects.

“Equinor has decided to discontinue its plans to drill the Stromlo-1 exploration well, as the opportunity is not commercially competitive,” said Jone Stangeland, Equinor’s country manager for Australia.

The move will be marked up as a major win for green groups and local communities opposed to the developmen.

Iron ore billionaire Andrew Forrest also led a high-profile campaign against Bight drilling, warning he could unleash a sizeable financial campaign against Equinor if it failed to change its plans.

The Wilderness Society launched legal action in January against Australia’s offshore safety watchdog for approving the project and on Tuesday demanded the federal government ban drilling in the Bight.

“We are now calling on the Australian Government to listen to the people and permanently protect the unique waters of the Great Australian Bight from drilling for good,” South Australian director Peter Owen said.

The Bight’s deep water holds one of the last untested Australian oil exploration frontiers with oil major Chevron estimating it could produce on a similar scale to Bass Strait’s once-great oilfields.

BP pulled out of the Bight in 2016 after a protracted approvals process, fierce green opposition and depressed oil prices, followed by Chevron the year after.

Equinor’s exit likely reflected the stronger carbon reduction targets of big oil companies in Europe, consultancy EnergyQuest said.

“Carbon costs are starting to bite and the European companies appear to be setting higher hurdles for oil projects than gas,” EnergyQuest chief executive Graeme Bethune said.

“This is another example of European influence on investment globally, similarly to the decisions by the European Investment Bank to no longer invest in fossil fuel projects in developing countries and the decision by the Swedish Central Bank to no longer invest in bonds issued by the Alberta, Queensland or West Australian governments.”

Resources Minister Keith Pitt said he was disappointed but noted it was a commercial decision.

“Equinor has made it clear this was a commercial decision and the company will continue to be part of the Australian oil and gas industry,” Minister Pitt said.

A huge public campaign against the project over-stated the risks, according to the South Australian Chamber of Mines and Energy.

“The public campaign waged against Equinor deliberately overstated risk and ignored the significant benefits of the project at a time where Australia’s oil production has fallen significantly over the last decade and we now import over 80 per cent of the oil we use.”

The oil and gas industry body Appea also rallied against false claims made by activist groups.

“The proposed exploration activity had been subject to an extreme campaign of false and exaggerated claims that deliberately overstated the risks and ignored the potential benefits,” Appea said.

Equinor had planned to start drilling on the Stromlo well, 476km west of Port Lincoln, by the end of 2020 if exploration well and safety issues are also cleared.

It told federal, South Australia and local authorities about its decision according to a statement on Tuesday.

“We will engage with the federal and state authorities regarding our decision to discontinue the exploration program. We hold an exploration permit offshore Western Australia and will maintain other ongoing interests and activities in Australia,” Mr Stangeland said.