ConocoPhillips Hits New Gas Discovery in Australia’s Otway Basin
ConocoPhillips, a major player in the energy industry, has recently announced a significant natural gas discovery in the Otway Basin, located off the coast of Australia. This discovery marks the first of its kind in the region since 2021, showcasing the company’s commitment to expanding its exploration activities in the area.
The Essington-1 well, which yielded this promising discovery, has yet to have its reserves and commercial viability estimated. However, initial results have been encouraging, prompting ConocoPhillips to proceed with drilling a second exploration well in December. Jan-Arne Johansen, the president of Conoco’s Australian operations, expressed optimism about the discovery and the company’s future prospects in the region.
ConocoPhillips holds a 51% stake in the Otway Basin project, with partners including Korea National Oil Corporation and Australian 3DEnergi. The company’s involvement in the drilling project dates back to 2019, following its divestment from the Darwin LNG project in Northern Australia. In 2019, ConocoPhillips sold its stake in Darwin LNG to local major Santos for $1.4 billion.
In addition to its activities in the Otway Basin, ConocoPhillips operates the Australia Pacific LNG facility in partnership with Origin Energy and China’s CNOOC. This facility is the largest LNG production site in eastern Australia, contributing significantly to the region’s natural gas supply. However, the project may face challenges due to a potential shortage of natural gas, leading to calls for prioritizing domestic supply over exports.
The Australian Domestic Gas Security Mechanism was implemented to ensure sufficient gas supply for local consumers. However, some critics argue that the measures taken under this mechanism have not been effective in improving outcomes for gas users. Mandates requiring gas producers to reserve uncontracted gas for the domestic market and diverting LNG exports to meet local demand have faced criticism for their limited impact.
Overall, ConocoPhillips’ recent natural gas discovery in the Otway Basin reflects the company’s ongoing commitment to expanding its presence in Australia’s energy sector. As the industry grapples with challenges related to domestic gas supply and export priorities, ConocoPhillips remains poised to navigate these complexities and contribute to the region’s energy landscape.
By Irina Slav for Oilprice.com
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