News: ORG UPDATE 1-Origin to pay Beach more for gas supply, cuts annual profit outlook for energy...

(Adds details, CEO quotes, share movement)

April 16 (Reuters) - Australia's Origin Energy (ORG) said on Friday it has been ordered to pay Beach Energy (BPT) more for gas supply, following arbitration on a contract dispute, leading it to cut its annual profit guidance for the energy markets division.

The "unexpected" outcome comes after a price review of gas purchased by Origin from Beach's Otway Basin fields, it said in a statement.

The arbitration outcome is expected to result in an increase of A$30 million-A$40 million in supply cost for 2021, rising further to A$60 million-A$80 million next year, Origin Energy said.

"We are disappointed in this decision which we believe is wrong, and entirely inconsistent with our prior experience in the gas market", Origin Chief Executive Officer Frank Calabria said in a statement.

"This will result in a gas price that does not reflect market prices, and it is therefore a very poor outcome", he added.

The dispute stems from long-term gas supply agreements included under a deal where Origin sold its Lattice Energy gas production business to Beach in 2017 for A$1.6 billion ($1.24 billion).

Origin shares slumped nearly 5% in their biggest intraday fall since early February, while Beach climbed about 3%.

Origin lowered its energy markets underlying EBITDA guidance for 2021 to a range of A$940 million-A$1.02 billion ($728.31 million-$790.30 million) from A$1 billion-A$1.14 billion.

The arbitration outcome is binding till 2023 with limited rights to appeal, Origin said, adding that it will now assess the extent to which the increased cost of supply can be mitigated.

($1 = 1.2907 Australian dollars)