Page 10 - AsianOil Week 10 2021

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Mature offshore project

signs CO2 supply deal

The Gippsland Basin Joint Venture (GBJV) will supply CO2 to Air Liquide Australia

COMMENTARY ONE of Australia’s oldest upstream projects to divest its gas assets on hold in January after
is looking for new ways to make money amid receiving disappointing offers.
declining production and an uncertain invest-
WHAT: ment outlook. US super-major ExxonMobil Constrained investment conditions
GBJV has secured a announced this week that the Gippsland Basin The Australian government has increased its
new revenue stream by Joint Venture (GBJV) had signed a long-term scrutiny of the offshore decommissioning seg-
agreeing to sell CO2 to Air deal to supply carbon dioxide (CO2) extracted ment, following the liquidation of Northern Oil
Liquide Australia. from its gas production to Air Liquide Australia. and Gas Australia (NOGA) in February 2020.
GBJV is a 50:50 venture between BHP Petro- Credit Suisse energy analyst Saul Kavonic told
WHY: leum and ExxonMobil and operates mature oil the Petroleum Economist last month that inves-
The offshore venture has and gas fields located in the Bass Strait off the tors had lost enthusiasm for end-of-life assets. He
seen production wane in southern coastline. The project has seen much said: “Australia lacks late-life asset specialists, and
recent years. speculation in recent months over its develop- decommission liability risk and increased regula-
ment future, given that both stakeholders have tory scrutiny towards decommissioning in wake
WHAT NEXT: shown a desire to offload their equity. of the NOGA debacle can deter potential buyers.”
Developing the asset’s One of NOGA’s subsidiaries had bought
revenue streams should New supplies into petroleum titles in the Timor Sea, which
boost its appeal to future ExxonMobil said on March 5 that GBJV had it exploited through the Northern Endeavour
investors. entered an agreement with Air Liquide Aus- floating production storage and offtake (FPSO)
tralia to capture and re-use CO2 extracted from vessel. The situation forced the federal govern-
Gippsland gas. ment to take control of the facility’s operations.
Under the long-term supply agreement, Air While BHP said in August 2020 that it wanted
Liquide will build a CO2 processing and puri- to sell its half of GBJV, noting after ExxonMobil
fication facility next to the Longford gas plants. pulled its sale that it remained committed to the
There are three gas plants at Longford, which process, it remains to be seen whether the com-
serves as the onshore receiving point for oil and pany can pull in an attractive enough offer given
gas output from the Bass Strait fields. In addition ExxonMobil’s challenges.
to the gas plants, there is also an oil facility as well The situation has prompted the industry to
as a gas conditioning plant at the complex. The come together to launch the Centre of Decom-
conditioning plant processes gas associated from missioning Australia (CODA), with the goal of
the Kipper Tuna Turrum (KTT) project. uniting the upstream in tackling a more than
ExxonMobil has agreed to construct facilities AUD50bn ($38.9bn) bill projected for necessary
at the conditioning plant that will allow the com- decommissioning due by 2050.
pany to send CO2 directly to Air Liquide’s new
processing facility, where it will be purified to What next
food and beverage grade quality. Construction Although the divestment drives of both GBJV
of the new Air Liquide facility and modifications backers have hit a speed bump, development has
to the conditioning plant are expected to begin in continued at the project.
2021, subject to regulatory approvals. ExxonMobil announced in January that
The deal shines new light on ExxonMobil’s efforts GBJV’s West Barracouta gas field development
to generate new revenue streams from an ageing asset project was expected to start up this year after
that has become somewhat troublesome to offload. the arrival of the Subsea 7 Seven Eagle diving
The super-major said in November 2020 that it had support vessel (DSV) that month.
shelved plans to sell its stake in the GBJV following an GBJV’s partners will continue to keep their options
“extensive market evaluation”. open as the global economy regains momentum.
Industry observers have noted that the com- BHP has kept its stake sale share on the table and, if a
pany likely struggled to secure an attractive solid enough offer comes along, ExxonMobil may be
enough offer owing to constrained upstream tempted to return to the market.
budgets and Australia’s increasing regulatory Either way, developing the long-term earn-
scrutiny of decommissioning obligations. ings potential from an asset that has already
Eni also appears to have struggled with failed to attract the desired level of investor inter-
similar issues, having reportedly put its plans est only makes sense.™

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