Australia's Beach Energy Reaches Deal with Webuild on Waitsia Gas Project

(Reuters) — Australia's Beach Energy Ltd. on Monday said it reached a deal with Italy's Webuild SpA to complete delivery of the A$768 million ($528.92 million) Waitsia Stage 2 gas project, subject to approval from the project's contractor Clough Ltd., which was placed into administration in December.

The company revised upwards its total capital expenditure (capex) estimate to A$400 million ($275.48 million)– A$450 million from an earlier A$350 –400 million, lower than what analysts were expecting.

The progress on the gas project — a joint venture with a unit owned by Japan's Mitsui & Co. — comes after the Italian construction firm took control of Clough last week.

In a note last week, Macquarie estimated an increase of around A$200 million in capex for the project and said the market was underestimating the capex increase.

"Webuild's acquisition of Clough and its personnel, systems and processes will enable project execution to continue uninterrupted," Beach said.

More than $8 billion worth of gas, power, rail and mining projects in Australia, Mongolia and Papua New Guinea were at risk of delays following the collapse of engineering firm in early December.

The Waitsia Stage 2 project was due to start producing gas for export through the North West Shelf LNG plant in late 2023.

The parties now target first gas from the Waitsia Gas plant by 2023-end. Analysts had expected a six-month delay to first production from an earlier anticipated start-up by second half of 2023.

($1 = 1.4520 Australian dollars)

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