The onshore permit, held by SriGAS Energy Group Asia (SEGA), covers 6000 square kilometres of the southeastern Ramu Basin, located about 40km from the provincial capital Madang.

The Banam Anticline, located in the southern part of PPL 248, has been identified as the dominant feature in the basin with about 200sq.km of four-way dip closure.

Energy Investments said the structure had been recognised as a potentially world-class gas prospect.

“The local municipal market and the regional power grid offer outlets for Banam gas,” the company said in a statement to the Australian Stock Exchange.

“The large gas potential also invites opportunities for LNG and GTL (gas to liquids) developments serving the major export into Asia and the sub-continent.”

Fifty kilometres of 2D seismic data has been acquired outlining the overall geometry and size of the anticline, which was initially delineated by surface mapping and photogeology.

If the farm-in goes ahead, Energy Investments will issue SEGA with 4 million fully paid ordinary shares, as well as fund two exploration wells to be drilled to depths of about 9000 feet (2743m) to test the potential of gas-bearing zones in the Banam Anticline.

Energy Investments says it has also begun negotiations with several potential farm-in partners and parties capable of providing future offtake agreements.

The licence terms of PPL 248 provides for a six-year exploration program, divided into three two-year terms, followed by a 20-year production period. The licence is currently in its second two-year term.