) remains doubtful about the development of the Scarborough natural
gas field off Australia's west coast and expects a decision around
the second half of 2013.
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The Scarborough gas field − a 50:50 joint venture with
Anglo-Australian mining giant
BHP Billiton Limited
) − is located in 900 meters of water, 300 kilometer offshore
Western Australia in the Carnarvon Basin. A unit of ExxonMobil,
Esso Australia Resources Pty Ltd, operates the filed, which is
believed to be the most isolated of the Carnarvon Basin gas
resources. Hence, the development of the filed remains challenging
due to location as well as operating environment and resource
As the operator, ExxonMobil is committed to commercially developing
the Scarborough field. However, the remote location of the field
has delayed the development timeline to not before mid 2013.
The companies are to evaluate several options that include
supplying gas to liquefied natural gas (LNG) plants of other
companies or the construction of a new LNG terminal on the
coastline by themselves.
Major international energy giants, with investments to the tune of
$175 billion or more, are busy building approximately 10 LNG
projects on Australia's coastline or at its proximity. This may
lead Down Under to surpass even Qatar in becoming the world's
leading exporter of LNG by the end of the decade.
Meanwhile, a supply glut has put natural gas prices in the U.S.
under pressure during the past year or so, as production from dense
rock formations - through techniques of horizontal drilling and
hydraulic fracturing - remains robust along with significant gas
discoveries. Given this demand/supply dynamics, Australia may face
intense competition from the U.S. as the companies target Asia's
rising demand for energy.
Again, companies like Caltex Australia Ltd. or
Royal Dutch Shell Plc
) have chosen to shut their refining facility and convert it to a
fuel import terminal. However, ExxonMobil still has its Altona
refinery west of Melbourne operational. The refinery has a daily
capacity of 80,000 barrels.
Irving, Texas-based ExxonMobil Corporation is the world's largest
publicly traded oil company, engaged in oil and natural gas
exploration and production, petroleum products refining and
marketing, chemicals manufacture, and other energy-related
businesses. Approximately 83% of Exxon's earnings come from its
operations outside the U.S.
In Western Australia, the company holds a 25% interest in
Australia's biggest LNG project, the $37 billion
)-operated Gorgon project.
ExxonMobil carries a Zacks #3 Rank, which is equivalent to a Hold
rating for a period of one to three months. Longer term, we
maintain our Neutral recommendation on the stock.