BP's Offshore Australia Drilling Plan Rejected By Regulators

U.K. supermajor BP plc (LON:BP) (NYSE:BP) is required to make amendments to its exploration plan for tapping oil in an unexplored frontier, off the coast of southern Australia, before regulators approve its drilling program. The energy giant applied for permission to drill four exploration wells in its Bight acreage.

However, the regulatory authority National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) rejected the proposal on environmental grounds. This is the second time that the regulatory body rejected the proposal.

In May 2015, BP had announced its intention to commence drilling in Oct 2016. In this regard, the company had submitted the first proposal which was rejected. BP again resubmitted the proposal earlier this year. BP will now amend the proposal and resubmit it by July. The program was originally projected to cost over A$1 billion ($710 million).

BP intends to drill in the Great Australian Bight, which according to the company, is among the last big unexplored basins in the world. However, more than five years after the company’s Gulf of Mexico oil spill incident, various environmental groups are apprehensive about a potential accident at the Great Australian Bight. Therefore, these groups have strongly opposed BP’s exploration proposal.

Per Australia’s national science agency – the Commonwealth Scientific & Industrial Research Organization – over 85% of the species in the Bight are not found anywhere else in the world. That includes the southern right, sperm and blue whales as well as sea lions and sharks.

BP is one of the major energy companies in the world. The company provides its customers with fuel for transportation, energy for heat and light, retail services and petrochemical products.

BP carries a Zacks Rank #3 (Hold). Better-ranked stocks from the oil and gas sector include CVR Refining, LP (NYSE:CVRR) , McDermott International Inc. (NYSE:MDR) and Braskem S.A. (NYSE:BAK) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).

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