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Chevron no-go decision for offshore project was a commercial decision

Chevron Corporation’s (ticker: CVX) Australia subsidiary Chevron Australia has announced the decision to discontinue the Great Australian Bight exploration program.

Chevron Australia Pulls Plug on Bight Exploration

Source: Chevron

Chevron Australia’s affiliates acquired two deepwater exploration blocks in the Great Australian Bight Basin in October 2013. The acreage spans more than 32,000 square kms. Chevron Australia’s affiliate is operator with 100 percent interest.

The announcement will see Chevron relinquish more than 32,000 square kilometers of acreage across two deep-water exploration blocks, which it has held since October 2013. “The news is a massive blow for South Australia, which also saw BP reverse its plans to drill in the Bight nearly a year to the day,” the Sydney Morning Herald reported.

While the Great Australian Bight is one of Australia’s most prospective frontier hydrocarbon regions, in the current low oil price environment it was not able to compete for capital in Chevron’s global portfolio.

Chevron Australia Managing Director Nigel Hearne said, “We are confident the Great Australian Bight can be developed safely and responsibly and we will work closely with the interested stakeholders to help realise its potential.”

This is a commercial decision and was not due to government policy, regulatory, community or environmental concerns, Chevron said.

“We have invested billions of dollars in Western Australia to commercialise our large gas resource base through the Chevron-operated Gorgon and Wheatstone LNG and domestic gas facilities and expect to be here for decades to come. Through greater collaboration with other producers in WA, Chevron is also pursuing opportunities to accelerate the commercialisation of our gas resource base through non-operated LNG facilities,” said Hearne.

Chevron is the largest resource holder in Australia with around 50 trillion cubic feet of gas resources, the company said in a press release. Chevron said it has made more than 25 new discoveries offshore Western Australia since 2009. Once the Chevron-operated Gorgon and Wheatstone LNG projects are fully operational, Chevron will be Australia’s largest liquefaction owner with 15.8 million tonnes per annum (MTPA).

Chevron Australia Pulls Plug on Bight Exploration

Source: Chevron

The Gorgon Project is the largest single development in Australia’s history with 15.6 MTPA of liquefaction capacity.

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