Australia Opens Bidding for Offshore Oil and Gas Acreage

The Australian government has announced the release of its first package of offshore oil and gas acreage for bidding since 2022. This initiative, made public on March 14, 2024, includes five areas located in the Otway Basin, which lies off the coast of Victoria in Commonwealth waters. This move follows a similar offering by the Victorian government for acreage in state waters, highlighting a renewed focus on energy exploration.

In recent years, the landscape of oil and gas bidding in Australia has shifted significantly. In 2020, over 40 areas were available for bidding, primarily in northern Australia. By 2022, this number had dwindled to just ten areas, reflecting a tightening market. The east coast gas market is projected to face a significant supply shortfall later this decade. While the newly offered areas may not yield commercial gas volumes immediately, the government hopes this step will mitigate future shortfalls.

Madeleine King, the Australian Minister for Resources, emphasized the importance of exploration in meeting the nation’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.” The Otway Basin is characterized as a legacy oil and gas area rather than a new frontier, featuring existing infrastructure such as pipelines and onshore gas processing plants, which could facilitate the integration of new gas discoveries.

Current Market Context and Future Outlook

Australia is on the verge of finalizing a comprehensive gas market review. This review aims to address shortfalls in the domestic east coast market while ensuring that liquefied natural gas (LNG) exports from the region can continue without disruption. The government is under pressure to balance domestic energy needs with its commitments to international LNG markets.

Recently, ConocoPhillips and its junior partner 3D Energi made headlines by announcing a gas find in the Otway Basin. They have commenced drilling on their second well as part of their ongoing exploration efforts. ConocoPhillips also holds a stake in one of the three LNG export consortia in Queensland that is currently under review by the government.

Samantha McCulloch, CEO of the oil and gas lobby group Australian Energy Producers, expressed optimism regarding government actions. She remarked, “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 newly available acreage can submit their applications until June 2024. This bidding process marks a significant opportunity for firms to engage in exploration activities as Australia navigates its energy future. The outcome of this initiative will be closely monitored by industry stakeholders, as it has the potential to shape the country’s energy landscape for years to come.