The Norwegian state-owned company only recently won environmental approvals for the Stromlo-1 exploration well for the offshore project.
Norway’s state-owned oil company, Equinor (NYSE:EQNR), has canceled its exploratory oil drilling off Australia’s southern coast in the Great Australian Bight, where it has been operating in the Ceduna sub-basin.
In a release on Tuesday (February 25), the company said that after a holistic review of its exploration portfolio, it has concluded that “the project’s potential is not commercially competitive compared with other exploration opportunities in the company.”
Keith Pitt, Australia’s minister for resources, said that the announcement from Equinor is “disappointing” for Australia, but stressed that the company made a commercial decision. He noted that it does not reflect poorly on the country as Equinor is remaining in Australia.
The minister added that the government will continue working with companies seeking exploration licenses in the area.
“The Bight Basin remains one of Australia’s frontier basins and any proposals for new oil and gas fields in this area will be assessed fairly and independently,” he said.
The federal approval for drilling was being challenged by environmental groups.
Equinor, formerly known as Statoil, is majority controlled by the Norwegian government. The company has operations around the world, producing 2.11 million barrels of oil equivalent per day.
Equinor’s withdrawal from exploration in the Bight comes even after it secured environmental permitting last December for its Stromlo-1 exploration well, which it said on Tuesday “confirmed (Equinor’s) ability to safely operate in the Bight.”
Equinor has other Australian exploration licenses in Western Australia that it will be maintaining.
Exploration of the Great Australian Bight has been a contentious issue, with environmentalists concerned about the potential for an oil spill in a national marine park that backs onto one of Australia’s most undeveloped and untouched stretches of coastline: the Nullarbor Plain.
Leaked Equinor documents in 2018 model what a worst-case scenario for a spill in the region would entail, with the company reporting that under the most unfavorable conditions possible (which include no company action), major spills could wash ashore from Albany in Western Australia to Sydney in New South Wales — more than 3,500 kilometers of coastline away.
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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.