CANBERRA – (Dow Jones) – BP PLC (BP) Monday won rights to drill for oil and natural gas in four deepwater exploration areas in Australia, the latest sign that the U.K. major’s role in a huge oil spill in the Gulf of Mexico isn’t stifling its efforts to grow overseas.
Drilling in an area covering around 9,260 square miles – bigger than the U.S. state of New Jersey – could start in 2013, the company said. Water depths in some of the blocks offshore South Australia state are up to twice that of BP’s Macondo well, which leaked millions of barrels of oil into the Gulf last year in one of the world’s worst spills.
BP is optimistic it will find commercial quantities of oil and gas in the deepwater area, although no existing published data is available for the site, which by industry standards is highly speculative.
“This is a material and early move into an unexplored deepwater basin,” said Mike Daly, BP’s executive vice-president of exploration.
The deal comes a day after BP unveiled a share-swap agreement with Russia’s state-controlled OAO Rosneft (ROSN.RS) that allows it to jointly explore and develop parts of the Russian Arctic. BP has also acquired stakes in deepwater blocks in the South China Sea over the past six months, as it steps up activity in frontier regions thought to be rich in oil and natural gas. Such bold bets have helped fuel a recovery in BP’s shares after the Gulf spill, even though the final cost of the disaster isn’t yet known. BP estimates it could be nearly US$40 billion, and has committed to selling up to US$30 billion of assets to help pay the bill.
Australia’s Energy Minister Martin Ferguson said BP was awarded the four permits following an “extensive assessment” by regulators that examined the company’s technical and financial competence to undertake exploration in the Ceduna Sub-basin off South Australia.
Additional conditions have been attached to the permits and BP has agreed to “fully integrate lessons learned from the Deepwater Horizon incident into its systems and processes,” Ferguson said. “I am satisfied that we have put in place the appropriate safeguards.”
BP will be under pressure to deliver on requirements set by Australian regulators, including standards to work alongside the fishing industry, and that exploration won’t impact whales and the Great Australian Bight Marine Park.
The deal further entrenches BP in Australia, where it operates two refineries, part-owns the North West Shelf liquefied natural gas project, and has agreed to pipe natural gas from several large discoveries to the A$43 billion dollar (US$42.4 billion) Gorgon liquefied natural gas project being built in Western Australia state.
The Asia-Pacific nation is offering scores of new leases that allow for deepwater drilling, as it looks to juggle environmental concerns with the need to plug a growing fuel deficit. As recently as 2000, the resource-rich country was self-sufficient in oil and gas, but now its import costs are rising.
“Australia has a A$16 billion trade deficit in crude oil, refined products and liquefied petroleum gas which is expected to rise, possibly as high as A$30 billion by 2015. Our energy security will be greatly enhanced by opening up new geological frontiers and reducing our dependence on imports,” Ferguson said.
Three other permits were handed out by Australian authorities to Woodside Energy Pty Ltd. (WPL.AU), Riverina Energy Pty Ltd., and Finder No. 4 Pty Ltd., in the established oil and gas exploration area of the Carnarvon Basin off Western Australia state.
