Origin Energy will divest the entirety of its interest in the Beetaloo Basin gas project. The energy giant will sell its share to Tamboran, and launch a broad review of all its exploration permits, in a move observers say is indicative of the decline of gas in Australia.
Last week, Origin announced it had reached an agreement with Tamboran to divest its majority share in Beetaloo for $60 million. Origin owns 77.5% of the project, with the remainder owned by Falcon Oil & Gas Australia.
“The decision to divest our interest in the Beetaloo and exit other upstream exploration permits over time, will enable greater flexibility to allocate capital towards our strategic priorities to grow cleaner energy and customer solutions, and deliver reliable energy through the transition,” said CEO Frank Calabria in a statement. “We believe gas will continue to play an important role in the energy mix and it remains a core part of our business.”
Origin will also carry out a ‘strategic review’ of the rest of its upstream exploration permits, with the goal of stepping away from them too, in future. This review will not include its interests in Australia Pacific LNG.
Located approximately 500km southeast of Darwin, Beetaloo was a key project in the Morrison government’s post-COVID ‘gas-led recovery’ plan. Origin itself previously described Beetaloo as “one of the most promising shale gas resources anywhere in the world”.
In fact, as recently as April, Origin reaffirmed their commitment to drill for gas there, after the government confirmed it wasn’t breaking sanctions against Viktor Vekselberg. Vekselberg is a Russian oligarch, who indirectly owned a stake in Beetaloo through Falcon’s share.
Now, they expect losses of $70-90 million as a result of the sale to Tamboran. But it won’t be a total loss – Origin will collect a 5.5% royalty on future production at Beetaloo. And if development continues in the region, says Calabria, Origin will still receive “competitively priced” gas supply.
Harriet Kater, climate lead at the Australasian Centre for Corporate Responsibility, warns that “Origin will still receive up to 36.5 petajoules of gas per annum from a successful Beetaloo development, so is still directly invested in Beetaloo’s development.”
“Divestment of fossil fuel assets does not reduce emissions — it just shifts them — almost always to even less responsible owners,” she says.
She’s not wrong – Tamboran previously came under fire when it failed to attend a Senate inquiry into the Morrison government’s controversial grants program. Under the program, Tamboran received $7.5 million in gas subsidies.
It’s spinning a broken record to say Australia has a long way to go on greening our energy. Ten new offshore areas across the country were approved by the federal government for oil and gas exploration last month. So were two permits for new offshore greenhouse gas storage facilities.
But we’re seeing a downward trend in the gas sector – profits are down, and environmentalist demands are putting the pressure on. Former Origin exec turned Climate Council energy analyst, Andrew Stock, says the divestment from Beetaloo “shows that the company recognises the crumbling case for new gas exploration in Australia.
More companies should follow in origin’s footsteps and walk away from this polluting fossil fuel.”
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