Beach Petroleum Limited and its joint venturer in the BMG project, Anzon Australia Limited, announces the signing of a 15 year Gas Sales Agreement (GSA) with Alinta Limited to supply gas from the offshore Gippsland fields to Tasmania for power generation.

The gas will be used by Alinta Limited to supply the first private sector power station, Tamar Valley Power Station, in Tasmania. The Tamar Valley Power Station will be a high efficiency, gas fired combined cycle power station using best practice technologies.

The initial contract, which is conditional and subject to a final investment decision (FID) by the joint venturers, is to supply 225 PJ of gas over a primary term of 15 years, commencing in 2009. It includes an option for additional gas supply, providing growth opportunities for all parties.

The signing of the GSA provides for a further expansion in the development of the Basker Manta and Gummy fields which commenced less than two years ago. Beach Petroleum is the 50 per cent owner of the Basker Manta and Gummy (BMG) fields with the remaining 50 per cent owned by the operator of the project Anzon Australia Ltd. The joint venturers will now proceed with the process leading to FID. Major equipment selection and process design completion is imminent.

Development of the BMG project began with a focus on producing oil from the Basker and Manta fields, based on initial 2P reserves estimates of around 23 million barrels.