Australian oil and gas producer Beach Energy has agreed to dispose of its 40% stake in Victorian Otway assets to OG Energy for A$344m ($243.34m) to accelerate the supply of gas to the East Coast.

The agreement was signed by Lattice Energy, a subsidiary of Beach Energy and OGOG, a subsidiary of OG Energy.

OGOG will acquire a stake in part of Beach’s nearshore and offshore Victorian Otway Basin interests. Upon completion, Beach will continue to operate the assets.

The Otway segment comprises the Otway Gas Plant, existing gas fields Geographe, Thylacine, Halladale, Speculant, and Black Watch, in addition to exploration prospects Enterprise and Artisan.

Beach Energy CEO Matt Kay said: “This transaction introduces a fully aligned partner to support the rapid exploration and development of our offshore Victorian acreage.

“Securing an excellent development partner for the Otway gas fields is a pivotal step towards creating new supply to Australia’s East Coast gas market.”

“Securing an excellent development partner for the Otway gas fields is a pivotal step towards creating new supply to Australia’s East Coast gas market.

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“As we’ve previously stated, we intended to sell down our interest and will be applying the sales proceeds to reduce debt and fund a portion of our future capital expenditure programme. It will also reduce Beach’s share of future expenditure in the Victorian Otway Basin.”

The transaction, which is conditional to customary conditions, including the Foreign Investment Review Board (FIRB) approval, will be effective from 1 July 2018.

Completion conditions are likely to be fulfilled by the end of the third quarter of fiscal 2019. Once the deal is completed, four new joint ventures (JVs) will be established, namely the Otway, HBWS, Enterprise, and Artisan.

In each JV, Beach or its wholly owned subsidiaries will own a 60% interest and remain as operator, while the remaining 40% will be owned by OGOG.