The project, which could cost up to $10 billion, is proposed to use Chevron’s 4 trillion cubic feet Wheatstone gas discovery made in 2004, according to a report in the Australian newspaper.

Quoting a Chevron spokesperson, the newspaper reported that Chevron would undertake the upstream gas field development, while SasolChevron would work on the downstream project.

SasolChevron is also involved in GTL projects in Qatar and Nigeria.

In 2000, Sasol of South Africa and Chevron of the United States joined forces to build and later expand up to four GTL plants in different countries with large gas reserves.

The merged entity is next month scheduled to begin deliveries of clean diesel from its $900 million Oryx GTL plant in Qatar, which will initially produce 34,000 barrels per day and eventually expand production to 100,000bpd.

A second plant in Nigeria is currently under construction, with start-up planned for 2009.

In November last year, PetroleumNews.net reported that Sasol chief executive Pat Davies flagged the announcement of a similar project for Australia by year-end.

A couple of months before, SasolChevron’s Australian representative Tony Pytte said Australia should develop a combination of liquefied natural gas and GTL because it has “all the right drivers”, including “strong government support, a good fiscal regime and vast gas reserves”.

GTL diesel is also compatible with existing diesel engines and distribution systems.

It offers lower tailpipe greenhouse gas emissions than petrol without the high sulphur and particulate emissions of conventional diesel. But as gas must first be put through the Fischer-Tropsch process, which produces a lot of carbon dioxide, before being refined, doubts remain over the lifecycle greenhouse gas impact of GTL.