Beach Energy challenges 110% gas reservation
Key points
- Beach Energy chairman Ryan Stokes criticised the federal government's planned domestic gas reservation mandate.
- Shares in the energy producer have fallen approximately 30% since late March amid policy concerns.
- The company warned it will withhold shareholder investment from new domestic gas supply projects if returns do not justify risks.
Beach Energy (ASX:BPT) chairman Ryan Stokes warned that the federal government's proposed 110% domestic gas reservation policy penalises local suppliers.
The proposed mandate would require gas exporters to supply 110% of wholesale market demand on the east coast.
"Forcing exporters to oversupply the domestic market undercuts the companies that have always supplied it," said Beach Energy Chairman Ryan Stokes.
Stokes stated that the company will not commit shareholder capital to new supply developments where risk-and-reward metrics remain unfavourable.
Following the announcement, the Beach Energy share price was down at $0.90.
The policy criticism arrives directly ahead of a scheduled Senate committee report examining the domestic gas reservation bill.
Investor concerns regarding the proposed reservation system have contributed to a 30% drop in company market valuation since March.
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