By Nick Toscano
Oil and gas major ExxonMobil will hand over management of eastern Australia’s biggest source of domestic gas for the first time since the 1960s, as its joint venture partner sets its sights on new wells to eke out more supplies of the fossil fuel from ageing offshore fields.
More than 500 workers at ExxonMobil subsidiary Esso Australia were told on Tuesday morning their jobs and the operatorship of Victoria’s Gippsland Basin joint venture – a network of offshore platforms in Bass Strait and processing plants at Longford and Long Island Point – would be transferred to Woodside Energy from next year.
ExxonMobil and Woodside Energy’s Marlin B platform in Bass Strait.Credit: ExxonMobil
Under the deal, ExxonMobil and Perth-based Woodside would remain 50:50 equity partners, with their responsibilities for decommissioning the ageing infrastructure unchanged, the companies said.
However, Woodside, as operator, would gain the ability to independently invest in future oil and gas wells or expansion projects in Bass Strait. On Tuesday, Woodside said it had identified four potential development wells that could deliver up to 200 petajoules of new gas into the tight east-coast domestic gas market – enough to supply about 40 per cent of a year’s total demand.
The news comes as authorities, including the Australian Energy Market Operator (AEMO), sound warnings that millions of households in Victoria, NSW and South Australia are at risk of gas shortfalls during periods of elevated winter heating demand in as little as three years’ times unless new supplies are made available. The vast Gippsland Basin gas fields, which have kept gas-reliant homes and businesses on the eastern seaboard well supplied for decades, have entered a period of rapid depletion, with scant new projects available to replace them.
Producing and burning natural gas releases planet-heating carbon dioxide and methane emissions, which governments are trying to dramatically reduce in a push to combat dangerous global warming. Although more Australians are making the switch from gas-powered appliances to electric alternatives, demand is not falling at the speed needed to avert supply shortfalls in coming years.
Australia’s east coast gas market is on a path towards a “structural shortfall”, said global consultancy Wood Mackenzie.
“Gas demand on the east coast remains resilient, but new supply is not keeping pace,” it said.
ExxonMobil has operated the Gippsland Basin joint venture since it began producing fossil fuels with BHP in 1969. Woodside, the largest Australian oil and gas company, bought BHP’s global petroleum division in 2022, including its stake in the Gippsland Basin.
Woodside executive vice-president Liz Westcott said the rationale for assuming operatorship was compelling, and “reinforces Woodside’s position as Australia’s leading energy company”.
“Taking operatorship of Bass Strait demonstrates Woodside’s continued commitment to meeting Australia’s domestic energy demand while maximising the value of existing infrastructure,” she said.
ExxonMobil Australia chair Simon Younger said ExxonMobil remained committed to providing reliable supplies of gas to its customers in Australia.
“After operating the Gippsland Basin Joint Venture for more than 50 years, we are proud to be handing over the reins and transitioning our highly experienced Bass Strait workforce to our valued partner Woodside,” he said.
“We look forward to working with Woodside as it continues to maximise Gippsland Basin production.”
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