(EnergyAsia, January 5 2012, Friday) — Meridian SeamGas, an Australia-based joint venture between WestSide Corporation Limited and Mitsui E&P Australia Pty Ltd, has executed an agreement to fast-track access to gas to help fulfil its contractual obligations and reduce payments to remedy shortfalls.

In a statement on behalf of the joint venture, WestSide Corp said it has entered into a flexible gas market swap agreement to supply 25 terajoules a day (TJ/d) from its Meridian SeamGas business.

“The agreement will enable WestSide to reduce payments remedying supply shortfalls factored into the original Meridian SeamGas purchase price. Swap volumes are flexible and the gas loan is to be repaid by the end of 2015,” said the statement.

The agreement with an unnamed “leading market participant” provides the joint venture partners with the flexibility on borrowed gas volumes during 2012 to complement increasing production.

WestSide said it will purchase gas to help meet demand from existing customers supplied by Meridian SeamGas, and re-sell the same volume to the supplier by end- 2015.

WestSide CEO Julie Beeby said the agreement enabled the joint venture partners to fast track access to gas to help meet two sales contracts to supply an aggregate total of 25 TJ/d.

“By bringing forward this capacity to meet our gas sales commitments, WestSide is also positioned to reduce the payment of remedies factored into the price the Company originally paid for its 51% interest in Meridian SeamGas,” Dr Beeby said.

Under the inherited production rate, Meridian SeamGas has been unable to supply its gas sales agreements in full. A balance sheet provision in Westside’s 2011 accounts covering this liability was based on the conservative assumption that the shortfall would remain for the life of the contract.

Dr Beeby said completion of the gas swap at the end of 2015 was timed to match the potential commencement of many opportunities for gas sales to domestic customers and liquefied natural gas (LNG) export projects being developed at Gladstone in Queensland state.

“This flexible gas swap arrangement will help Meridian SeamGas ramp up production to match requirements to secure larger volume, long-term gas supply contracts,” Dr Beeby said.