Shipping company Golar LNG Ltd. has signed an agreement with Australian company Liquefied Natural Gas Ltd to begin planning a joint development to produce liquefied natural gas from coal-seam gas from a US$500 million installation on the Aussie coast.

“The (signing) formalises Golar's participation in the project and defines key commercial terms for both equity participation and the purchase of LNG,” a statement said.

The news comes during a week in which BG made its offer for coal-seam player Pure Energy unconditional. BG had said its rival bidder for Pure, Arrow Energy, would have to hire an outside party to develop area shale gas.

Project company Gladstone LNG is planning a yearly 1.5 million tonnes of LNG from a neew facility in Port of Gladstone, Australia. The plant will purify and liquefy coal-seam gas from the Arrow Energy gas fields of northeast Australia. Golar and LNG Ltd agreed to each take a 40 percent stake in the GLNG joint venture.

Arrow Energy has an option to take the final 20 percent equity in the project. First production is scheduled for 2012.

Golar has agreed to buy output from Gladstone but has a long-term buyer in mind for the cargoes that two of its ships will carry. The sale of LNG might allow Golar to avoid fundraising or for the Glandstone partners, including Golar, to find a new partner.

Tags: Gladstone LNG, Golar LNG