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    ExxonMobil's Eastern Oz Assets 'complex': WoodMac


Not every upstream company will have the know-how to make the most of them, says the consultancy.

by: William Powell

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ExxonMobil's Eastern Oz Assets 'complex': WoodMac

The Gippsland Basin assets off eastern Australia that 50% owner US ExxonMobil is offering for sale are mature and complex, even if gas prices are rising to tempt buyers, consultancy Wood Mackenzie said September 18. 

So while the opportunity for the Australian upstream and gas market is considerable – the assets play a key role in supplying gas to Australia's biggest market – not every company will be able to make the most of them, it said. Jointly owned with BHP Billiton, the fields supply between 40% and 50% of east coast gas demand. 

"We believe this will lead to a far smaller pool of realistic buyers, who will have to get comfortable with the age of the assets, declining production and significant decommissioning liabilities. The fact that a previous effort to offload the Gippsland oil assets failed due to uncertainty over abandonment costs highlights how big an issue it will be, but also suggests any new operator would look to extend and increase production from the portfolio to delay the onset of decommissioning spend," it said.

ExxonMobil has confirmed it is testing the market, as it seeks to raise money to spend on higher return projects, including developing its vast Permian shale oil acreage in the US. It is eyeing revenue of $15bn from asset sales by 2025, with European assets also in the mix. It wants to remain the world's biggest private energy company and it is focusing its efforts on lower-cost, higher volume reserves and projects, including US and Mozambique LNG exports and Guyanan and Brazilian oil production offshore.