AsianOil: Beach to sell LNG to BP

Australian independent Beach Energy has agreed to sell its share of liquefied natural gas (LNG) production from the Waitsia project onshore Western Australia to super-major BP.
Beach said on September 27 that it had signed a heads of agreement (HoA) to sell its 3.75mn tonnes of expected production from Waitsia’s second phase of the development from the second half of 2023. However, the agreement’s terms include built-in flexibility around the first shipment in order to allow for variables in the project’s construction and commissioning activities.
The independent added that annual contract volumes and supply terms were “aligned to the provisions in the executed North West Shelf (NWS) gas-processing and lifting agreements”. The two sides are aiming to sign a fully termed LNG supply and purchase agreement in the first half of next year.
Beach owns a 50% stake in Waitsia, while Mitsui and Co. owns the other 50% and operates the development, which is one of the country’s largest onshore discoveries in the last four decades. It was the only project to receive an exemption from the WA government’s August 2020 decision to prevent new onshore gas fields from selling their production outside the state.
Beach said its share of Waitsia’s production would be sold at a price linked to both Brent and Japan Korea Marker (JKM) price indices, while noting that sales would include full upside exposure to each index as well as a downside price protection mechanism.
The company added: “This hybrid pricing structure is expected to provide Beach with favourable price movements during North Asia winter periods.”
Supply will be delivered on a free-on-board (FOB) basis from the NWS facilities.
The Waitsia joint venture reached a final investment decision (FID) in December 2020 on initial funding for Waitsia’s 250 TJ (6.5mn cubic metre) per day second phase of development. Beach said at the time that full funding would be committed once certain regulatory approvals and commercial conditions were resolved.