Origin Energy Limited (Origin) has announced it plans to expand its east coast portfolio with an agreement to purchase gas from Beach Energy Limited.
The integrated energy company secured a conditional agreement with Beach Energy to purchase up to 139 petajoules (PJ) of its natural gas production from Moomba in South Australia.
Under the terms of the agreement, Origin will purchase up to 17PJ of natural gas per annum from Beach Energy for an eight-year period commencing in the 2015 financial year. The price incorporates a combination of an oil linked curve and other parameters.
Origin retains the right to extend the agreement for an additional two years, which would increase the gas purchase to up to 173PJ throughout 10 years.
The gas represents Beach Energy’s equity share of production from the South Australian Cooper Basin and South West Queensland joint ventures. Origin also has interests in these joint ventures and has an equity share of production.
Origin Energy Markets chief executive officer Frank Calabria said the gas purchase agreement enables the company to bolster its east coast gas portfolio given the expected tripling in demand for natural gas.
“Origin’s integrated position, coupled with its existing gas transport capabilities, made this an attractive opportunity to add to the company’s gas portfolio and to secure gas to support our domestic energy markets business,” Mr Calabria said.
“At the same time, Origin will continue to review the timing of development of medium-term gas production growth opportunities, including the Ironbark CSG project in Queensland and the Halladale Black Watch gas project in Victoria.”
The agreement is between Origin subsidiary Origin Energy Retail, and Beach Energy subsidiary Delhi Petroleum.