The partners also signed a formal agreement to set up the Kipper Unit Joint Venture, owned 32.5% by ExxonMobil subsidiary Esso Australia Resources, 32.5% by BHP Billiton and 35% by Santos, ExxonMobil said.

“The Kipper project has the potential to be one of the largest gas developments to come onstream in Victoria since the Bass Strait fields were developed by Esso and BHP over 30 years ago,” ExxonMobil Australia chairman Mark Nolan said.

“Kipper gas will underpin future growth in ExxonMobil’s gas sales,” he said. The venture expected to make a final investment decision next year.

While Santos is now the largest individual shareholder in Kipper, ExxonMobil and BHPB still have 32.5% each in the project and ExxonMobil remains the operator.

Kipper gas will be processed at the Longford facility owned by ExxonMobil and BHPB.

The Kipper partners have been under pressure from the Victorian Government to develop the Gippsland Basin field, discovered in 1986.

The State Government is withdrawing the retention leases covering Kipper and is offering a production licence, forcing the partners’ hand to fast-track a development plan for the field.

The field, in 100m of water about 45km off the Victorian coast, holds about 620 billion cubic feet of gas and 30 million barrels of condensates and liquids.

Production could start by the end of the decade, Nolan said.