Australia granted offshore petroleum exploration permits to BP on Monday in a vote of confidence after last year's catastrophic Deep Water Horizon oil spill, but with strict safety and environmental safeguards attached to the deal.
The four permits, the first to be issued since 2000 in the environmentally sensitive Great Australian Bight off South Australia state, cleared the way for BP to explore waters up to 4,600 meters deep in some areas.
"If BP had not have accepted those conditions, then I would not be doing this media conference and they would not have been given the permits," Resources Minister Martin Ferguson told journalists at parliament in Canberra.
The oil industry worldwide is preparing for a crackdown on risky and expensive offshore drilling after an explosion last year in April on the BP PLC-operated Deepwater Horizon rig in the Gulf of Mexico.
A commission of inquiry appointed by President Barack Obama earlier this month said the risks of offshore drilling at depth were acceptable, but said the industry needed more effective management and regulation.
Australia's energy-reliant economy has a A$16 billion trade deficit in crude oil, refined products and LPG, which is expected to rise, possibly as high as A$30 billion by 2015. The latest exploration could help plug that.
Ferguson said the round of permits, which were also given to Australian energy giant Woodside to operate in Western Australia state, emphasized the need for world's best safety practices by BP.
The exploration projects included over 11,400 square km of 3D seismic surveying within the first two operational years along with the drilling of four exploration wells in the third year, likely to be 2013 or 2014.
The permit granting followed an extensive assessment and due diligence process in the wake of the Deepwater Horizon incident in the Gulf of Mexico, examining the technical and financial competence of BP to undertake the work under stringent Australian legislation.
"It is the first time that we as a nation have issued them with rights as respect to exploration in Australia," Ferguson said. "It is not the first time since the Gulf that they have received similar rights throughout the globe," Ferguson said.
Australia's center-left government last November said it tighten the approval process for offshore oil and gas exploration after one of the biggest oil spills in the country's history off Western Australia, the Montara spill, which saw 20,000 barrels of oil gush into the Timor Sea over two months.
All wells drilled in the past five years would be reviewed, Ferguson said then, while industry monitoring would be increased and a sole national regulator established in 2012.
"I am satisfied that we have put in place the appropriate safeguards and note BP's commitment to work with government and regulators to ensure the highest possible safety standards as they carry out this work," Ferguson said on Monday.
The permits awarded to BP, Woodside and two smaller firms would, the government said, drive an extra A$682 million in guaranteed offshore petroleum exploration investment over the next three years, even as Prime Minister Julia Gillard's Labor prepares to hit miners with an unpopular profits-based tax.
The three additional permits were awarded to Finder No.4 Pty Ltd, Woodside and Riverina Energy Pty Ltd, covering the highly prospective Carnarvon Basin, which remains the country's leading offshore petroleum-producing area.