Costs to develop Beach Energy and Mitsui & Co's Waitsia gas project could climb to $850 million, as Webuild prepares to take over the old Clough contract.
Costs to develop Beach Energy and Mitsui & Co's Waitsia gas project could climb to $850 million, as Webuild prepares to take over the old Clough contract.
Located in the Perth Basin, Waitsia is one of the biggest of the seven projects Webuild has acquired as part of its takeover of Perth engineer Clough in a deal that was finalised on Friday after weeks of negotiations.
Beach indicated last week that agreements with its ‘preferred contractor’, which was unnamed at the time, were due to be announced ‘imminently’.
Addressing investors for the first time since Webuild confirmed it would take on the project, Beach said this morning that its share of total capital expenditure for the project had been revised from the $350 million to $400 million range to $400 million to $450 million.
It follows due diligence and a review of cost and work schedules by the new contractor.
Waitsia stage 2 development costs have previously been estimated at $750 million, but could land in the ballpark of $850 million following the revisions.
In addition to higher costs, the joint venture is now targeting first gas from the project by the end of 2023, as opposed to mid-2023 as had been expected in the December quarter.
Despite the setbacks, Beach Energy chief executive Morne Engelbrecht said the new agreement with Webuild would help provide renewed momentum, stability and continuity to the project.
“The dedication and commitment of the project team has been second to none and will ensure the Waitsia GasPlant becomes an important piece of energy infrastructure for Western Australia for many years to come,” he said this morning.
“We look forward to working with Webuild and Mitsui to complete the project and commencing supply of LNG while we continue to meet our domestic gas commitments with first gas targeted by the end of 2023.”
It had been reported earlier in January that workers had walked off the site over fears they would not be paid what they are owed, however Beach and Mitsui have consistently assured that employees and subcontractors were being paid since Clough’s collapse.
The joint venture is working to add more wells and a production facility to the gas field in the hopes of lifting production to 250 terajoules per day.
Beach's Perth Basin gas reserve volumes were cut by more than 10 per cent during December.
