Bass Strait oil shut-in

Press, 6 October 1988, Page 29

Bass Strait oil shut-in

NZPA-AAP Melbourne The partners in Australia's core Bass Strait oil field said they will shut-in up to 20 per cent of its capacity due to falling oil prices and high excises. . Exxon Corp unit, Esso Australia, and BHP Petroleum Pty said they would curb up to 85,000 barrels a day (bpd) of Bass Strait’s 380,000 to 400,000 bpd production. The firms last week confirmed 25,000 bpd had already been shut-in from one well attracting high government excises and yesterday said a further 60,000 bpd from' two other wells could be shut-in in the near future. “The price is what is forcing us to do it,” an Esso spokesman said. “At SUSII a barrel, which is around the price we’re looking at at the moment, that oil costs us SUS9.6B a barrel in excises, royalties and taxes. “That 88 per cent levy simply doesn’t leave enough to cover operating costs let alone make a return on the investment,” said the Esso spokesman, whose company operates the field. To combat the effect of high excise on “old” oil — that discovered before

September, 1975, the Bass Strait partners last week set plans to explore and develop new Bass Strait fields which attract no excise on the first 30 million barrels. Five new small fields are being developed in the programme concentrating on “new” oil and are expected to yield up to 25,000 barrels a day from the end of 1989. The companies will only pay normal 39 per cent corporate tax and modest 12 per cent royalties on the new fields. The Esso spokesman could give no precise date for the extended shut-in of “old” oil output, but said it could happen around the end of the month. “We very much hope it won’t be necessary but it will be in the very near term if the Government is not able to offer some excise relief,” the spokesman said. But a spokesman for Resources Minister, Mr Peter Cook, in Canberra, said the Bass Strait partners had made no formal approach on excise since the oil price fell. Esso and BHP sell their share of Bass Strait’s Gippsland crude independently largely to the domestic market.