The so-called Gladstone LNG project will have an initial capacity of 1.3 million tonnes per annum of LNG, but may expand to 2.3MMtpa subject to the availability of additional gas.

LNG Ltd said the agreement with Laing O'Rourke covered all the LNG storage tank prerequisite construction services through to financial close.

"The signing of the agreement is a material milestone, with the storage tanks representing the Gladstone LNG Project's largest single capital cost item and having the longest construction delivery schedule," LNG Ltd's managing director Maurice Brand said.

"The agreement may be expanded to include the balance of the LNG plant and it is the intention of both parties to replace the agreement with a bankable construction agreement prior to financial close."

Laing O'Rourke is expected to mobilise its workforce in late 2008 to ensure the project development schedule is achieved, including targeted first LNG production from the project during the first quarter of 2011, Brand said.

LNG Ltd said this LNG storage tank cost and delivery schedule estimates contract, together with the company's ongoing work with WorleyParsons on the balance of the LNG plant, provided confidence for the project's overall capital cost and delivery schedule.