ExxonMobil to invest $200mn in offshore Australian gas project

ExxonMobil subsidiary Esso Australia Resources plans to invest nearly $200mn in the offshore Kipper 1B project to boost gas production from the Gippsland Basin in Australia, the company said on February 24.

The project, approved by Esso Australia and joint venture partners Mitsui E&P Australia and Woodside Energy, involves drilling a subsea well into the Kipper field using the VALARIS 107 jack-up rig and upgrading the West Tuna platform.

Historically, the Gippsland Basin has been a cornerstone of Australia's oil and gas industry. Since offshore production commenced in the late 1960s, the basin has yielded over 4bn barrels of crude oil and approximately 8 trillion cubic feet (227bn cubic metres) of gas. But output  has been on a downward trajectory for years, underscoring the importance of new projects like Kipper 1B in maintaining gas supply for Australia’s East Coast.

The Australian Competition & Consumer Commission has warned that the east coast could face gas shortages from 2027, potentially necessitating imports. The regulator also highlighted protracted regulatory approvals and policy uncertainty as obstacles to expanding domestic supply. The regulatory approval process for offshore gas projects in Australia has become increasingly complex, as a result of environmental and local community concerns that sometimes lead to approvals getting challenged in the courts.

Drilling into the Kipper field is expected to begin later this year, with platform upgrades occurring simultaneously. The project aims to expand capacity from the Kipper field and deliver critical gas supplies ahead of winter 2026.

Kipper 1B follows the completion of the Kipper Compression project and the West Barracouta project, which commenced production in 2021.

ExxonMobil Australia chair Simon Younger said Esso Australia continues to invest in multiple projects to sustain gas production in Gippsland into the 2030s. “Projects like Kipper 1B are vital to help meet the country’s energy security needs by bringing new supply online, which will be used exclusively for Australia’s domestic market,” he said.

Esso operates assets in Bass Strait through the Gippsland Basin joint venture (JV) with Woodside, and the Kipper Unit JV alongside Mitsui and Woodside. Mitsui holds a 35% stake in Kipper, while Woodside and ExxonMobil each own 32.5%

Highlighting the Gippsland Basin’s maturity, Esso Australia commissioned Swiss firm Allseas in December to remove up to 12 decommissioned platforms in the region over a four-month period starting in 2027. ExxonMobil, which has operated in Australia for decades, had sought a multibillion-dollar sale of its Gippsland assets at the peak of the coronavirus pandemic, before calling off the divestment in November 2020.