Santos, as operator, said expenditure had been approved for the completion of the FEED work by the end of May with State and Federal regulatory and environmental studies expected to be done by late 2004.

On completion of the environmental studies in VicP-44, the joint venture will make a final investment decision on the project in order to meet development targets and deliver first gas in the March 2006 quarter.

The Federal and Victorian government authorities have already formally approved the environmental assessment processes for the development of the Casino Project.

The Joint Venture has already secured a 12-year gas sales agreement with TXU Australia to supply gas from Casino which was discovered in September 2002 and lies 29 kilometres southwest of Port Campbell and 250 kilometres southwest of Melbourne.

The Gas Sales Agreement is for an initial sales volume of up to 293 petajoules (PJ) of gas from the permit, with an option to extend this volume by a further 200 PJ.

Casino is estimated to have current recoverable reserves of between 200 - 270 billion cubic feet of gas.

"The successful sale of gas from the Casino field to TXU was a ground-breaking commercial contract. We were able to finalise the sales contract with TXU prior to drilling the second appraisal well on the field. Casino is also a fine example of cycle time reduction with only 13 weeks between reaching total depth of the second appraisal well in November 2003 and committing to FEED," said Santos' managing director John Ellice-Flint.

Commercialisation of the field is expected to include the drilling of two development wells, sub-sea infrastructure and the installation of a pipeline from the field to underneath the coastline near Port Campbell, continuing to TXU's Iona gas processing plant.

Participants in VIC/P44 are Santos (Operator) 50%, Peedamullah Petroleum (AWE) 25%, Mittwell Energy Resources (Mitsui) 25%.