The Western Australian (WA) government has signed an agreement with Woodside-led consortium for the provision of domestic gas from the Browse floating LNG (FLNG) project off the Kimberley coast.
Following the deal, the partners are preparing to move to front-end engineering and design (FEED) phase later this year.
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Partners in the project include Woodside Browse (operator), Shell Australia, BP Developments Australia, Japan Australia LNG (MIMI Browse) and PetroChina International Investment (Australia).
Premier and state development minister Colin Barnett said: "While the state government would still prefer this project to be developed onshore, this agreement ensures that the project will deliver benefits to the state in terms of domestic gas and opportunities for local businesses and workers.
"It also clears the way for the extension of the retention leases covering the project fields, and provides the Browse joint venture with certainty as it heads towards the front-end engineering and design phase."
Under the key principles agreement (KPA), the Browse joint venture (JV) proposes to reserve gas equivalent to 15% of production from the state’s share of the Torosa filed.
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By GlobalDataTorosa is one of the three gas fields that make up the project.
Over the project life, the domestic gas obligation is expected to amount to around 800 petajoules.
The JV also intends to develop an integrated supply chain in WA to provide port, marine, aviation, storage as well as transport services over the life of the project.
Barnett added: "This supply chain will consist of a primary operations base in Perth, as well as support locations in the north-west."
The JV is expected to make its final investment decision in 2016.
State royalties are estimated at more than $1bn over the project’s life.
Woodside has also received offer from Western Australia Offshore Petroleum Joint Authority and the WA minister for mines and petroleum to retain lease for WA-28-R, WA-29-R, WA-30-R, WA-31-R, WA-32-R, TR/5 and R2.
