Beach Energy has entered into an agreement with BP Singapore regarding the supply of Beach’s share of liquefied natural gas (LNG) from the Waitsia Gas Project Stage 2, Western Australia.
The heads of agreement (HOA) contains all material terms and conditions for bp purchasing all 3.75 million tonnes of Beach’s expected LNG volumes from the Waitsia Gas Project Stage 2, with supply forecast to commence in the second half of 2023.
The annual contract volumes and supply terms are aligned to the provisions in the executed North West Shelf (NWS) gas processing and lifting agreements.
The terms include built-in flexibility around the commencement of firm supply to ensure alignment with the completion of construction and commissioning activities.
Supply will be delivered on a free on board (FOB) basis from the NWS facilities in Karratha, Western Australia, which leverages BP’s leading LNG trading and shipping capability.
BP is an existing participant in the NWS joint venture and has a long history of lifting LNG from the NWS facilities.
The agreed LNG price is linked to both Brent and Japan Korea Marker price indices (with full upside exposure to each) and includes a downside price protection mechanism.
This hybrid pricing structure is expected to provide Beach with favourable price movements during North Asia winter periods.
Beach and BP are targeting execution of a fully termed LNG supply and purchase agreement in the second half of the 2022 financial year.
The Waitsia gas field is ranked one of the largest gas fields ever discovered onshore in Australia.
Waitsia Stage 2 will involve further development of the gas field, with more wells and a new production facility capable of producing 250 TJ/day.
The project is a joint venture between Beach Energy and Mitsui E&P Australia, who is the operator.
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