DARWIN, May 30, 2007 (Dow Jones Newswires)
Significant oil discoveries in Australia are likely to become rare in coming years, the country's resources minister said Wednesday, although he expects upstream companies to keep drilling.
"We won't stop looking, we're still looking for the next big find," federal resources minister Ian Macfarlane told Dow Jones Newswires in an interview.
Australia's upstream, or exploration and production, sector has in recent years turned its focus to natural gas - particularly in its liquefied form - as major oil finds become fewer and farther between.
Macfarlane acknowledged that mainstay fields, both onshore and offshore, have broadly gone into natural decline.
Australia's key oil-production areas are in the Carnarvon Basin offshore of Western Australia state - which includes the giant North West Shelf development - and in the Bass Strait off the country's south, where one of the country's most well-known fields, Gippsland, accelerated the sector's growth.
Output has declined to about 560,000 barrels a day from a high of more than 800,000 barrels a day at the start of the decade; the country sits on about 1.6 billion barrels of proven oil reserves, according to industry estimates.
However, Macfarlane noted that upstream companies have increasingly become "less disappointed" at finding smaller oil deposits, as wells often contain sizable natural gas reserves.
He declined to identify where the next frontier areas for exploration may be, referring that question to the industry, but noted there's been "strong demand" in the offshore Browse Basin, to the northwest.
Despite a regional shift toward liquefied natural gas, "(refined) oil remains the major transportation fuel," he said.
Competitive As LNG Supplier
In the interview at Parliament House in the northern Australian city of Darwin, where he hosted the 8th Asia-Pacific Economic Cooperation Energy Ministers Meeting, Macfarlane painted Australia as a leading LNG supplier despite growing competition.
The biennial APEC energy security dialogue ended earlier Wednesday with a tour of the Darwin LNG plant, among the world's most sophisticated.
"Our selling point is we are secure, reliable, geopolitically stable and geologically stable," he said in comparing his country to Qatar, which is set to overtake Indonesia as the world's largest LNG exporter.
He added that Australia also offered LNG customers a "well-defined regulatory framework."
Malaysia, which is fiercely protective of its reputation for never having missed a cargo shipment, will remain one of the key competitors.
However, Australia, which doesn't have its own state-run energy company, won't demand a share of production from acreages it releases for drilling, Macfarlane said.
Copyright (c) 2007 Dow Jones & Company, Inc.
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