ConocoPhillips Australia has commenced exploration in the Otway Basin seeking new domestic natural gas supply to address Victoria’s forecast gas shortfalls in coming years. The exploration programme aims to identify viable natural gas reserves supplying the domestic market and supporting Australia’s future energy needs, ensuring reliable power generation and residential heating whilst supporting local manufacturers.
On 1 November 2025, exploration drilling commenced at the first of two planned exploration wells for 2025. The first well, Essington-1, is located approximately 50 kilometres southwest of Port Campbell in offshore permit area VIC/P79, which lies adjacent to current natural gas developments.
Jan-Arne Johansen, President of ConocoPhillips Australia, stated that natural gas is key to providing reliable and affordable energy to households and businesses as Australia seeks to transition to net zero, with ConocoPhillips Australia looking to be part of the solution.
Drilling of Essington-1 is expected to continue through end-November 2025, with a second well in VIC/P79, Charlemont-1, anticipated to commence in December, weather and operational conditions permitting. Additional wells may be considered in future under the approved Environment Plan.
Johansen stated that the company remains committed to conducting exploration activities safely with extensive environmental protection measures in place. The Environment Plan received approval in February 2025 following extensive application and assessment processes with the regulator.
ConocoPhillips Australia operates the Otway Exploration Drilling Program, holding 51% interest, with joint venture partners Korea National Oil Corporation holding 29% and 3D Energi Limited holding 20%.
The Otway Basin represents an established petroleum province with existing gas production from multiple fields including ConocoPhillips-operated developments. The basin’s proven hydrocarbon system and proximity to Victorian gas infrastructure make it attractive for exploration addressing regional gas supply requirements.
Victoria faces forecast gas supply shortfalls as production from Bass Strait fields declines whilst domestic and industrial demand continues. New gas discoveries in the Otway Basin could help address these shortfalls by providing proximity to existing pipeline infrastructure and Victorian demand centres.
The VIC/P79 permit area’s adjacency to current developments suggests geological prospectivity based on nearby discoveries whilst potentially enabling infrastructure sharing if commercial discoveries are made. Proximity to existing facilities can reduce development costs and accelerate production startup compared to frontier exploration requiring new infrastructure.
ConocoPhillips’ experience as operator of existing Otway Basin production provides operational knowledge, established relationships with regulators and stakeholders, and infrastructure that could support development of new discoveries. This operational presence reduces entry barriers compared to explorers without established regional positions.
The two-well programme for 2025 enables testing of multiple geological prospects within the permit area, with drilling results informing decisions about additional exploration investment. Successful discoveries would require appraisal drilling, development planning, regulatory approvals, and ultimately production infrastructure before contributing to gas supply.
Environmental approval processes for offshore exploration have become more rigorous in recent years, with regulators requiring comprehensive assessment of potential impacts on marine environments and implementation of protective measures. ConocoPhillips’ February 2025 Environment Plan approval followed extensive consultation and technical review.
Natural gas’s role in energy transition reflects its function as dispatchable generation supporting renewable energy integration, lower emissions intensity compared to coal, and suitability for existing infrastructure and equipment. Victoria’s transition away from coal-fired power generation creates ongoing requirements for gas-fired generation providing grid stability.
Manufacturing sectors including food processing, chemicals, and materials production rely on natural gas for process heat and feedstock applications. Adequate domestic gas supply supports industrial competitiveness and employment in manufacturing-dependent regions.
The international joint venture structure brings Korea National Oil Corporation’s investment alongside 3D Energi’s participation, sharing exploration risks whilst providing diverse expertise and financial resources. KNOC’s involvement reflects Korean interest in securing LNG supply sources, though domestic Australian sales would take priority for any discoveries given permit terms and policy settings.
Exploration success in VIC/P79 would require commercial viability assessments comparing development costs against expected revenues from domestic gas sales. Victorian gas prices have experienced volatility reflecting supply-demand dynamics, with periodic shortfalls driving price spikes affecting consumers and industrial users.
The exploration programme represents private sector investment addressing energy security challenges through new supply development, demonstrating industry response to policy signals supporting domestic gas production for Australian markets. Outcomes will depend on geological success, commercial viability, regulatory approvals for any developments, and ultimately production volumes that could materially contribute to Victoria’s gas supply requirements.
For more information visit www.conocophillips.com.au
