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BP move pulls plug on Bight exploration

AAP logoAAP 11/10/2016 Prashant Mehra

Oil giant BP's decision to abandon exploration plans in the Great Australian Bight could mean that the region will remain unexplored for some time.

Analysts believe other companies with exploration permits in the area - including Australian oil and gas producers - are focused on other priorities amid weak oil prices.

BP said on Tuesday the decision followed a review of its future global opportunities, with the Bight project not delivering enough reward on investment.

"In the current external environment, we will only pursue frontier exploration opportunities if they are competitive and aligned to our strategic goals," managing director for exploration and production Claire Fitzpatrick said in a statement.

The company had planned to drill two wells in the Bight, with eventual spend on exploration in the region estimated at $1.4 billion.

"I suspect the region will stay off the radar of other energy companies because it is a frontier exploration area, which generally means 'expensive'," Deutsche Bank energy anayst John Hirjee said.

"The economics of these type of projects need to be very strong."

Other producers who have exploration permits there include global giant Chevron, US explorer Murphy Oil, and local oil and gas producers Santos and Karoon Gas.

The current weak oil prices means that most energy companies have cut their discretionary spending on new exploration projects, as they focus on servicing existing facilities and maintaining credit ratings.

BP's decision has been welcomed by environmental groups who have campaigned heavily against drilling in a marine reserve area.

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