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Dambier-to-Bunbury pipeline, as well as being supplied to the domestic market.
Beach anticipates that it will begin supplying BP with LNG from Stage 2 in the second half of 2023, with the SPA having a duration of five years. The company noted that BP is a partner in the North West Shelf project and has a “long history” of lifting LNG from the facility.
The LNG that BP will receive is priced using a hybrid pricing structure linked to both Brent and Japan Korea Marker (JKM) indices, Beach said. The company added that the pricing parameters agreed by the two parties support Beach’s exposure to the current commodity cycle prices and do not restrict upside price participation. The SPA also includes a downside price protection mechanism, it said.
Under pressure
Beach and BP’s SPA comes at a time of intensi- fying pressure on Australia’s LNG exporters to prioritise the domestic market amid a gas short- age in the country predicted for 2023 and 2024.
Earlier this month it was reported that the Australian government was considering curb- ing exports of LNG following a recommen- dation from the Australian Competition and Consumer Commission (ACCC). The plan is being considered in order to divert supplies to the domestic market. It has gained traction among various stakeholders, with state energy ministers from New South Wales and Victoria calling on producers to prioritise the domestic market this week.
Australian Minister for Resources Made- leine King is now consulting with the country’s
LNG exporters, as well as overseas trading partners, before making a decision on the mat- ter in October. She has already extended the Australian Domestic Gas Security Mechanism (ADGSM) until 2030 and said she was also looking into strengthening the mechanism, potentially including a price trigger. However, she said there was no point in seeking to break Australian LNG exporters’ long-term contracts, and that she wanted the country to continue being known as a reliable trading partner. Thus, volumes that are sold on the spot market are expected to be the most exposed to any curbs that may be brought in.
Some Australian LNG players are hoping to avoid export curbs by stepping up invest- ments in gas production for the domestic market. Among these is Senex Energy, which announced an expansion of its Surat Basin oper- ations this week. (See: Senex unveils Surat Basin gas expansion plans, page 10) Senex supplies gas to the Gladstone LNG (GLNG) terminal in Queensland. Another supplier to the facility, Santos, which also operates GLNG with a 30% stake, is pushing to connect its newly acquired Hunter gas pipeline to its Narrabri gas project, which would link that project to the domestic market.
GLNG is considered to be one of the projects most likely to be affected if export curbs are brought in.
If Canberra decides to proceed with export curbs, this could affect gas supplies and prices in 2023, after markets have already experienced unprecedented volatility in 2022 owing to Rus- sia’s war in Ukraine.™
Earlier this month it was reported that the Australian government was considering curbing exports of LNG.
Australia’s LNG exporters are increasingly coming under pressure to prioritise the domestic market.
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