Slugcatcher sheds tears over fears there'll be no more Bass Strait beers

WHEN old friends fall out over a single issue they can usually kiss and make up in the pub on a Friday night. When they fall out over two issues, both involving many millions of dollars, there is less chance of a kiss, and almost certainly no Friday night drinkies – which appears to Slugcatcher to be the state of the relationship between BHP Billiton and Exxon Mobil.
Slugcatcher sheds tears over fears there'll be no more Bass Strait beers Slugcatcher sheds tears over fears there'll be no more Bass Strait beers Slugcatcher sheds tears over fears there'll be no more Bass Strait beers Slugcatcher sheds tears over fears there'll be no more Bass Strait beers Slugcatcher sheds tears over fears there'll be no more Bass Strait beers

No-one is (yet) saying that a once-beautiful relationship is over. But there seems little doubt that marriage counselling is required, a remarkable situation for the duo who put oil and gas on the map in Australia some 40 years ago.

Way back in the 1960s it was the pairing of BHP and Esso (predecessor to Exxon Mobil) which took up the challenge proposed by the late Dr Lewis Weeks, the geologist who suggested that there was oil waiting to be discovered in Bass Strait.

Offshore exploration was, at the time, a relative novelty just about anywhere in the world and certainly in Australian waters. But, as they say, it is history that oil was found and Bass Strait became a prolific producer.

Time, that great corroder of everything from machinery to relationships, has ground down Bass Strait. The oil is running low, the people working there are getting older, and some of the equipment not quite as good as it once was.

Enter issue No.1 – the Longford gas explosion of 1998 which claimed two lives and cost Victorian business a pile of cash in lost production. Government inquiries pinned the blame for the explosion on Esso/BHP – a point which appears to have deeply angered the BHP part of the joint venture.

Just how angry was shown in the Victorian Supreme Court last week when Alan Archibald QC lodged a claim on behalf of his client, BHP Billiton, against Esso – claiming that it had breached an operating agreement covering Longford.

The guts of the claim is the BHP Billiton reckons that Esso did not keep Longford in “a good and workmanlike manner” – quaint language for not running the plant properly.

BHP Billiton said it had no part in the running of Longford and, accordingly, had also suffered losses and wanted compensation. No dollar figure was specified, but a half share in a gas plant is not cheap.

Esso, naturally, counter claims that Longford is a 50/50 joint venture and the partners share half of the risks and rewards.

If a stoush between two old mates in the Victorian Supreme Court is not enough to test a relationship then how about a disagreement over a $4 billion liquefied natural gas (LNG) project off the coast of WA – what we could call issue No.2.

Ahh, say Slugcatcher’s readers, now we see the point. You’re drawing a link between Longford and the differing views of BHP Billiton and Exxon Mobil over the plans for the Scarborough gasfield.

Precisely, dear reader. On the one hand, it can be argued by anyone with a fully developed commercial sense, that there should be no linkage. These are separate events, and disputes over dollars never effect commercial relationships. That, it is argued, is business.

But, to the average man in the street or, as they used to say, the man on the Clapham Omnibus, it is starting to look a little unusual that two old friends would be bickering so publicly – and there are few places less public than the Supreme Court, or at a press conference.

Slugcatcher will not go anywhere near the Longford case. He’ll leave that to the court. But the Scarborough case is becoming very public with BHP Billiton Energy boss, Phil Aiken, saying on Friday, “For Exxon Scarborough is not a priority. We see it as a priority”.

Aiken then added: “If they eventually want to get out of Scarborough, I’m sure there are plenty of companies that would want to take their place.”

Strong words, and not words normally used to describe what a friend might do – which takes Slugcatcher back to the question he started with: are we are seeing the end of a 40-year partnership?

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