The conditional agreement would see QGC supplying CS Energy between 60 - 90 petajoules of gas over 15 years.

QGC's managing director, Richard Cottee, said the contract would provide sufficient cash flow to enable QGC to expedite development of its extensive Surat Basin gas resource, now estimated in the order of 38 trillion cubic feet or comparable to the Timor Sea's total resource base.

Mr Cottee said QGC was confident of now capitalising on its huge resource base and developing into one of Australia's major on-shore gas producers over the next 10 years, with realisable annualised earnings of between $40 to $60 million by 2015.

"The fundamental dynamics of Australia's gas industry are in flux with the South Australian and New South Wales annual demand of 250 petajoules up for grabs in 2006. With the quality and extent of our resource, and this cornerstone contract with CS Energy, QGC is poised to be a significant player."

QGC's supply contract with CS Energy, representing just under 1% of the company's total imputed reserves, will be supplied by the Berwyndale South project, which is currently undergoing final pilot development testing.

"With Berwyndale only 12 kms from the existing Roma to Brisbane pipeline, we'll be supplying this gas to the Brisbane city gate at highly competitive prices," Mr Cottee said.

"We've no doubts that gas supplies from all our future commercial developments can be competitively priced. Our CBM derived product can be delivered into the major industrial centres of Queensland at rates below those of the mooted PNG pipeline and around 40% under the ruling gas price, though we anticipate that Queensland CBM will be able to extract a diversity premium based on security of supply and proximity to market."

Mr Cottee said that to achieve its 10 year targeted profit growth, QGC had only to lock away one contract comparable in volume to the CS Energy deal per year through until 2015.

"We're extremely confident, based on the competitive pricing structure we envisage taking to the market, of securing these new business levels and supplying between 40 to 60 petajoules per annum within a decade," he said.

QGC's priority in 2003/5 will be to develop the gas field to meet its contractual arrangements with CS Energy. With its first commercial field at Berwyndale South underpinned by the CS Energy contract, QGC will be able to begin working in 2003 on securing a customer for its next planned commercial field.

"While we're yet to finalise which field this will be, it most certainly will be in proximity to Berwyndale to ensure we can capitalise on the infrastructure and delivery synergies on offer through geographic proximity," he said.

QGC expects that certification of its Berwyndale South reserves to be achieved within the first half of 2003, putting the company on target to start supplying CS Energy by the middle of the 2004 financial year.