Upstream operator Eastern Star said it had signed a memorandum of understanding involving the supply of 40 petajoules of gas per annum from the Bibblewindi production pilot – in which holds a 65% stake and Gastar has 35% – to the gas-fired power station.

The MOU will also allow for the expansion of gas supplies to meet requirements of power station developments at other locations.

“An anticipated benefit of the proposed agreement is that the power station and gas field developments will proceed in parallel,” Eastern Star managing director David Casey said.

“This will allow the developments to be optimised to take account of both electricity market and gas field requirements.”

Casey said the arrangement was a further major step forward for the Narrabri gas project.

“They will contribute to early commercialization of gas production at Narrabri, leading in turn to significant regional benefits and the emergence of the Narrabri gas project as NSW’s major indigenous source of natural gas,” he said.