Australia’s Beach Energy said on Thursday that the second stage of the Waitsia gas project in Western Australia will be delayed due to labor shortages.
A unit of Japan’s Mitsui & Co, the operator of the the Waitsia Stage 2 project, and Beach took a final investment decision on the expansion project worth A$768 million ($510 million) in December 2020.
Prior to that, the partners signed third-party tolling deals with Australia’s Woodside and its North West Shelf LNG venture participants.
Last year, Beach also finalized a deal to supply LNG to a unit of energy giant BP from the NWS LNG plant on a free on board basis in the second half of 2023.
Mitsui E&P Australia and Beach previously awarded the engineering, procurement and construction gig to Australian contractor Clough.
However, Clough was placed into voluntary administration in December last year after a deal by its parent Murray & Roberts and Webuild fell through.
In February 2023, Beach signed a deal with Italy’s Webuild to complete the second stage of the Waitsia gas project.
“Since then, the tight labor market in Western Australia in particular has impacted construction progress at the Waitsia gas plant to create a range of uncertainty in outcomes that means Beach no longer considers it prudent or appropriate to maintain its previously targeted schedule and capital estimates,” Beach said on Thursday.
“Review of cost and schedule by the Waitsia Joint Venture operator and Webuild is ongoing to identify and implement opportunities to mitigate impacts on the project and constrain the range of uncertainty,” it said.
Beach said it will provide an update when this review is concluded, adding that the Waitsia project “remains strongly value accretive and a key element” in Beach’s future growth.
