Australia Opens Bidding for Offshore Oil and Gas Acreage

The Australian government has announced the release of its first offshore oil and gas acreage for bidding since 2022. This decision, made public on November 2, 2023, includes five areas located in the Otway Basin, situated off the coast of Victoria. The announcement follows a similar move by the Victorian government, which recently opened acreage for bidding in state waters.

Despite a significant reduction in available areas for exploration since 2020, when over 40 regions were offered, the new package aims to address future energy demands. By 2022, only ten offshore areas remained available for bidding, highlighting a trend of diminishing opportunities. The east coast gas market in Australia is projected to experience a supply shortfall later in the decade, prompting the government’s action.

Madeleine King, the Resources Minister, emphasized the importance of exploration and discovery in meeting Australia’s energy needs. She stated, “Exploration and new discoveries will play an important role in underpinning our energy needs and support Australian industry and households as we meet our net-zero commitments.”

Focus on Legacy Infrastructure

The Otway Basin is recognized as a legacy oil and gas region rather than a new exploration frontier. It is equipped with existing infrastructure, including pipelines and onshore gas processing plants, which could facilitate the development of any new gas discoveries. While the current areas offered for bidding may not yield commercial gas volumes within this decade, they are viewed as a strategic step to mitigate future supply shortages.

In conjunction with this bidding announcement, the Australian government is finalizing its gas market review. This review aims to address current shortfalls in the east coast market while ensuring that liquefied natural gas (LNG) exports can continue.

On a related note, ConocoPhillips and its junior partner, 3D Energi, recently announced a gas discovery in the Otway Basin. They have commenced drilling the second well of their exploration campaign. Additionally, ConocoPhillips holds a stake in one of the three LNG export consortia in Queensland currently under review by the government.

Industry Response and Future Outlook

The announcement has been positively received by industry leaders. Samantha McCulloch, CEO of the oil and gas lobby group Australian Energy Producers, commented on the significance of this week’s developments. She stated, “This week we’ve seen welcome recognition from the Victorian and federal government that continued exploration is critical to maintaining the pipeline of gas supply projects to meet our long-term energy needs.”

Companies interested in the new acreage can submit their applications until June 2024. This bidding process is expected to invigorate the exploration landscape and potentially secure Australia’s energy future.