The Australian firms looks to be capitalising on the rising price of LNG, after the UK supermajor recently reported staggering profits.
Confirming the deal had been made, Beach Energy announced that the gas will begin export in the second half of next year under a five year agreement.
Supply will be delivered on a free on board basis from the North West Shelf (NWS) facilities in Karratha, Western Australia, a venture that the London listed BP is already an existing participant.
Last year the Australian firm announced it was in talks with BP for an LNG deal exporting from the Waitsia gas project stage 2, a joint venture with Japanese trading house Mitsui.
This deal has a hybrid pricing structure, meaning that payment will be linked to the Brent crude and Japan Korea Marker (JKM) benchmarks.
Beach Energy and BP’s agreement also has a downside price protection mechanism.
Beach Energy chief executive Morne Engelbrecht said: “Signing of the LNG [sale and purchase agreement] with BP is a significant milestone in our delivery of material growth and another step closer to Beach becoming a supplier of LNG to the global market,
“Once LNG sales commence, Beach will have further diversified its commodity pricing exposure.
“Beach’s oil and gas portfolio will provide exposure to Brent oil prices, spot LNG prices, east coast, west coast and New Zealand domestic gas prices, and oil-linked gas prices. This places Beach in an enviable position within the Australian energy sector.”
At the time of writing (9.45am), Beach Energy shares are being sold on the Australian Securities Exchange for $1.84 AUD (£1.06), meaning prices are up 6.647%.
BP stock is currently up by 0.49%, bringing the price of shares to £4.13.
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