Resources exploration in Australia continues to enjoy very strong interest from local and global investors. The reason for this is clear - Australia is well endowed with high quality resources and a low sovereign risk political environment that inspires confidence in investment and development. High global oil prices, coupled with a strong market for Liquid Natural Gas (LNG) in the Asia-Pacific region, provides an economic driver for an upswing in exploration in Australia. Increased demand for energy with the industrialisation of China and other emerging Asian economies underpins these market conditions. Australia's geographic location ensures it is well placed to meet the rapidly expanding energy needs of the Asia-Pacific region. The exploration success of significant deepwater discoveries is also contributing to the lively bidding for acreage.
Australia possesses many proven, world-scale petroleum bearing basins. Production in 2007-08 was 440,000 barrels of crude oil and condensate a day with the vast majority of this coming from offshore areas. In 2008-09 Australia's crude oil and condensate production is forecast to total 460,000 barrels per day. However, much of the continent and its offshore areas remain unexplored. Over 40 onshore and offshore basins await in-depth exploration to determine their full potential. Encouraging exploration in these areas is a high priority for the Australian Government.
The extent of exploration drilling in Australia is relatively low compared with other regions in the world. Australia has about 16 million square kilometres of onshore and offshore sedimentary basins and by the end of 2006 over 9,700 exploration and development wells had been drilled over these basins. In comparison over 60,000 wells have been drilled in the Gulf of Mexico - an area smaller than the Carnarvon Basin off the north-west coast of Australia. By any measure, Australia is under-explored.
The existence of world-class gas discoveries plus recent medium sized oil discoveries show that offshore Australia is highly prospective for petroleum; in fact Australia has a reputation for being gas prone. About 92% of Australia's oil and 86% of gas production is from offshore resources located in Bass Strait, the North West Shelf and the Timor Sea. It is also in the offshore areas that most of the undiscovered resources are thought to exist.
Some of the attributes which make Australia attractive for petroleum exploration include:
- extensive opportunities to explore in prospective basins;
- the regular release of new exploration acreage covering a range of regions from mature to frontier;
- access to free or low cost comprehensive, high quality geoscientific databases;
- expanding physical infrastructure, sophisticated technical and services support, and a highly educated workforce and pool of skilled petroleum professionals;
- an internationally competitive profit-related tax system that recognises the risks of exploration;
- proximity to markets in the growing economies of Asia-Pacific;
- continuing government initiatives supporting geoscientific mapping of geological features, petroleum occurrences, resources, and tenement boundaries;
- an attractive policy and legal framework for oil and gas development, conducive to companies of all sizes;
- security of title with the right to retain and/or develop a discovery, subject to meeting the specified terms of a retention lease or a production licence;
- transparent, predictable and practical regulatory requirements covering all stages of operations;
- a free market philosophy which welcomes foreign companies - Australia has no mandatory local equity requirements and has no government owned oil companies;
- government facilitation of proposed projects, including fast-tracking of approvals processes for major projects;
- an open and competitive economy, including deregulated banking and foreign exchange arrangements and a sophisticated capital market; and a good record of industrial harmony.