"Following an extensive and rigorous commercial and technical evaluation of the various development options available to the Sunrise JV, including building non-shore processing plants at Darwin and in Timor-Leste, a floating LNG processing facility best satisfies the key development requirements outlined by the IUA [International Unitisation Agreement]," Woodside Petroleum chief executive officer Don Voelte said.

"We expect that the selection of a floating LNG processing option will, in addition to generating significant long-term petroleum revenue, provide a broad range of social investment, employment and training opportunities for Timor-Leste."

The IUA signed by the Timor-Leste and Australian governments in February 2007 requires the Sunrise JV to develop Greater Sunrise to best commercial advantage consistent with good oilfield practice.

Voelte added the Sunrise JV would continue to work with both governments to progress development of Greater Sunrise.

Woodside had previously said that its FLNG plans would involve the use of a vessel capable of producing 4 million tonnes of LNG per annum along with condensates through a phased development with seven initial production wells.

The Greater Sunrise fields lie about 450km northwest of Darwin and are estimated to contain about 5.13 trillion cubic feet of gas and 225.9 million barrels of condensate.

Timor-Leste has remained consistently opposed to the development of Greater Sunrise which did not involve a processing facility in the country, though President Jose Ramos-Horta has hinted a floating development might be acceptable.

A final investment decision on Sunrise is expected in 2012 with first LNG targeted for 2016.

The Sunrise JV participants include operator Woodside (33.4%), ConocoPhillips (30%), Shell (26.6%) and Osaka Gas (10%).