Under terms of the MOU, the unnamed affiliate will enter into negotiations, the details of which are confidential, with the Joint Venture which could lead to the supply of at least 2 million tonnes of LNG annually over a 20-year period, beginning in 2008.

The Gorgon gas field, located offshore Western Australia, has certified proven hydrocarbon reserves of 12.9 trillion cubic feet (Tcf), with total natural gas resources in the Greater Gorgon Area exceeding 40Tcf.

"Growing North American demand for natural gas is widely projected to outstrip supply capabilities," said John Gass, president of ChevronTexaco Global Gas.

"The Gorgon Joint Venture is well positioned to help satisfy natural gas demand in both the West Coast of the United States and Mexico."

However the future of the Gorgon project is still uncertain with the Environmental Protection Agency and the Conservation Commission rejecting ChevronTexaco's Barrow Island development proposal in their submissions last month.

While the rejection does not signify the death knell to the project the submissions are part of a report to be handed to the government for consideration along with the result of a six-week public submission period, which is currently underway.

While the financial report on the prospects of the project gave full support to the JV, Barrow Island is a unique environmental sanctuary and state government, state cabinet and federal approval is necessary before any development can begin.

ChevronTexaco is also seeking approvals for the construction and operation of an LNG terminal and regasification facility offshore Baja California which would be capable of receiving Gorgon LNG.

"We believe the world-class Gorgon gas field and the significant natural gas resources in the Greater Gorgon area are ideally situated to meet growing demand in the Asia Pacific Basin," Gass said.

"Development of these resources is a key element of our strategy to commercialise our equity resource base by targeting North American and Asian markets."

In another development, the Liberal Party of WA gave its backing to the project with leader Colin Barnett's endorsement ensuring that the Greens-led opposition to the project will not achieve the numbers in Parliament to halt the development.

The Gorgon Joint Venture participants include ChevronTexaco (4/7th interest and operator), Shell (2/7th interest) and ExxonMobil (1/7th interest).