Beach Energy interim chair Ryan Stokes has lashed the increasingly complex regulatory environment for Australian oil and gas projects in his address to the company’s AGM this morning.
Mr Stokes, whose company has production, development and exploration assets in the onshore Perth Basin as well as offshore Victoria, told shareholders the regulatory framework governing oil and gas was not keeping up with market needs.
The stand-in Beach chair said the industry needed greater certainty, claiming the current trends placed the domestic energy transition at risk.
“Gas projects are now experiencing extensive and costly delays in the environment plan approvals process,” Mr Stokes said.
“According to the regulator, only five applications have received approval in the last twelve months, and there are over forty applications under review.
“A process that may have previously taken months is now taking close to two years.
“The current ambiguity and complexity of the environmental approval process is a major risk to new projects.”
Beach highlighted gas price caps on the east coast and the implementation of a code of conduct as examples of government intervention in the market.
Mr Stokes said the federal government needed to act urgently to improve compliance processes and deliver certainty for developers.
“Instead of the current regulatory uncertainty and market interventions, there needs to be a focused pathway to get more gas to our domestic customers, including incentivising exploration and development of local gas near existing infrastructure,” he said.
Beach’s Western Australian interests include the Waitsia project, where Beach and its Japanese joint venture partner Mitsui & Co are building a stage-two gas facility.
Beach is also undertaking an extensive exploration program in the basin, culminating in the recent discovery of the Tarantula Deep gas discovery in October.
The company withdrew cost and timing guidance for Waitsia stage two earlier in the year, after contractor Clough collapsed and was purchased by Italian firm Webuild.
Beach is targeting Waitsia stage two delivery in mid-2024. No update has been provided to cost guidance.
The project was granted an exemption from Western Australia’s domestic supply policy by then-premier Mark McGowan in 2020, allowing it to export half its production over five years as LNG.
The policy facilitating an exemption was quietly changed earlier this year, requiring other developers in the Perth Basin to supply the domestic market only.
In a September submission, Beach told the state’s inquiry into WA’s domestic gas supply policy that the joint venture would not have been comfortable to make the investment commitment at Waitsia stage two without the LNG exemption.
Beach told shareholders it expected a material step-up in production and cash flow from Waitsia and its east coast Otway project during 2024.
It last month reported a 12 per cent revenue drop, attributed largely to a “disappointing” drop in east coast uptake for its product despite strong demand and singling out Otway Basin customer Origin Energy.
Mr Stokes assumed the interim chair role following the resignation of long-serving chair Glenn Davis, while Mr Clement fills the chief executive role until the arrival of Santos executive Brett Woods in February next year.
Mr Clement joined Beach as a director in May and assumed the interim role following the abrupt departure of Morne Engelbrecht in August, who spent a little over the year in the role, following Matt Kay’s two-year CEO stint.
The interim chair said the board was aware of concerns around the high rate of turnover in the Beach executive team, and said he was hopeful Mr Woods would be a longer-term appointment.
He backed the board’s decisionmaking in changing the company’s leadership.
“The board has to assess CEO performance, and ensure the position is held to account to deliver the performance requirements of the company,” Mr Stokes said.
“It is not just important for shareholders, but for all stakeholders, including employees. Any change of leadership is not made lightly, and all options are considered.”
Mr Woods’ contract includes a one-off retention incentive with a retention period of two years.
Mr Stokes and non-executive director Richard Richards – who is also Seven Group chief financial officer – were each returned to the Beach board today.