The Western Australian Government has signed a Key Principles Agreement with the proponents of the Browse floating liquefied natural gas project (FLNG) for the provision of domestic gas and to locate a supply chain in Western Australia.

Premier and State Development Minister Colin Barnett said this was the first time the State's domestic gas policy would be applied to an FLNG project.

"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," the Premier said.

"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 agreement, the joint venture has committed to reserve gas equivalent to 15 per cent of production from the State's share of the Torosa reservoir, one of three gas fields that make up the project.
 
"The domestic gas obligation will coincide with first production from Torosa and amount to around 800 petajoules over the life of the project, helping to secure the State's energy future," Mr Barnett said.
 
In addition, the Browse Joint Venture has committed to the development of an integrated supply chain in WA to provide port, marine, aviation, storage and transport services over the life of the project.
 
"This supply chain will consist of a primary operations base in Perth, as well as support locations in the North-West," the Premier said.
 
"The joint venture has committed to providing full, fair and reasonable opportunities for local industry participation, including for Aboriginal businesses and employment."
 
The Key Principles Agreement will form the basis of a detailed Development Agreement, to be finalised prior to the joint venture making its final investment decision, expected in 2016.


Fact File

• The State's domgas policy requires exporters of LNG to make gas equivalent to 15 per cent of their exports available in the domestic market
• The Browse domgas obligation amounts to approximately 60 terajoules per day
• The State's share of Torosa is estimated to be 65 per cent
• State royalties are estimated at more than $1 billion over the life of the projec