Beach Energy signs up with BP

Kerry Stokes-backed Beach Energy has entered into an agreement with BP Singapore to sell 3.75 million tonnes of LNG from the Waitsia Stage 2 project.

The LNG Sale and Purchase Agreement will see the BP subsidiary buy all 3.75 million tonnes of Beach Energy’s expected LNG volumes from the project, with supply expected to start in the second half of 2023 and to continue for about five years.

Mitsui & Co and Beach Energy are developing the $750 million Waitsia Stage 2 project with most of the Waitsia gas to be exported as LNG.

Seven Group Holdings is a major shareholder of Beach Energy.

Chief executive Morné Engelbrecht said Beach Energy was looking forward to a long and mutually beneficial relationship with bp.

“Signing of the LNG SPA with bp is a significant milestone in our delivery of material growth and another step closer to Beach becoming a supplier of LNG to the global market,” he said.

“Once LNG sales commence, Beach will have further diversified its commodity pricing exposure. Beach’s oil and gas portfolio will provide exposure to Brent oil prices, spot LNG prices, east coast, west coast and New Zealand domestic gas prices, and oil-linked gas prices.

“This places Beach in an enviable position within the Australian energy sector.”

Beach Energy’s announcement on the ASX today said there was flexibility on the commencement of supply, ensuring alignment with Waitsia Stage 2 construction and commissioning activities.

“The LNG Sale and Purchase Agreement contains a hybrid pricing structure linked to both Brent and Japan Korea Marker indices,” the announcement said.

“Pricing parameters agreed support Beach’s exposure to the current commodity cycle prices and do not restrict upside price participation.”