By David Winning
SYDNEY–Beach Energy withdrew a target date for completion of the Waitsia Stage 2 gas project in Western Australia and said it could no longer be certain there wouldn’t be cost overruns.
Beach cited a tight labor market in Western Australia for the decision, noting this had particularly impacted construction progress of the Waitsia Gas Plant. Management had previously targeted first gas by the end of this year.
“Beach no longer considers it prudent or appropriate to maintain its previously targeted schedule and capital estimates,” the company said in a regulatory filing on Thursday.
The Waitsia project is being developed by a joint venture between Beach and Japan’s Mitsui & Co.
A review of Waitsia Stage 2’s cost and schedules is ongoing, involving Mitsui and the project’s new contractor Webuild SpA, to identify and implement opportunities to mitigate the impact on the project, Beach said.
“The Waitsia project remains strongly value accretive and a key element in Beach’s future growth,” Beach added.
In February, Beach estimated its share of capex at between 400 million Australian dollars (US$267 million) and A$450 million. That forecast was up from an original forecast of A$350 million-A$400 million, and followed the insolvency of Waitsia’s original contractor Clough.
Write to David Winning at [email protected]
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