However, packaging and selling these types of assets, which are integrated more closely with upstream operations, presents a unique challenge.
The regulatory perspective
Australian companies dreaming of unlocking untold riches in their midstream portfolios will undoubtedly be contemplating the vast number of factors associated with the disposal of any key asset. From a commercial perspective, there will be joint venture approval considerations, the need for secure and long term tolling arrangements, competition and third party access considerations, as well as an overarching need to ensure that future upstream field development is not compromised in any way.
Underpinning many of these issues is the question of exactly how to navigate different regulatory hurdles associated with isolating and selling assets that have, until now, been treated hand-in-hand with upstream production.
Infrastructure such as major transmission pipelines (like the QCLNG pipeline), storage facilities (like the Iona facility) and LNG export facilities are often held in separate corporate ownership structures, stand-alone entities that have the benefit of all necessary permits, licences, consents and other agreements necessary to own and operate the asset.
Accordingly, structuring a sale of these types of assets will be (at least from a regulatory perspective) a relatively straightforward and well-understood process.
In contrast, other types of midstream assets that have been tagged for sale by market commentators are not as easily separated from the core upstream function of oil and gas production, at least from a regulatory perspective. For example, gathering networks and processing facilities have historically been constructed pursuant to the same approvals and consents as the production wells themselves.
As a result, the process of sufficiently isolating these midstream assets for the purpose of sale, while preserving the upstream company’s ability to continue to produce and develop its oil and gas fields, will be more challenging and complex.