Sonali Paul, Sameer Manekar

MELBOURNE, Reuters -Exxon Mobil Corp. and BHP Group (NYSE 🙂 announced on Thursday that they would continue with a project to increase gas production from the Gippsland basin Kipper field in southeast Australia. This will help address a looming shortage of gas in the market.

Exxon’s Esso Australia stated that the project will cost approximately A$400million ($291million) in order to obtain an additional 200 petajoules of natural gas (PJ) over the next five years. It also added that around 30 PJ would be produced next year.

Australia’s regulators warn that east Australia will face a shortage of natural gas starting in 2026. The reason is due to the ageing gas resources at Gippsland Basin Joint Venture. It has been the country’s largest supplier for many decades.

Esso is the partner in the 50-50 joint venture with BHP.

Gippsland Basin’s extra production will go online before five proposed LNG import terminals. They all aim to service the same market. The preliminary work on one has been completed.

Woodside is expected to take BHP’s interest in the Gippsland Basin partnership.

According to a spokesperson from BHP, BHP will contribute 50% of Gippsland Basin Joint Venture development spending as long it continues being a stakeholder.

Esso Australia said that it had advanced funding decisions in order to start production from the Turrum fields, off-shore Victoria.

($1 = 1.3723 Australian dollars)