LNG Limited said the investment by Shell, which could be worth up to $776 million, demonstrates the key role coal seam methane will play as feed gas for LNG projects in the future.
The company added it is in discussions with Arrow to increase the capacity of the first LNG train at Gladstone from 1.3 million tonnes per annum to 1.5MMtpa through a minor reconfiguration of the liquefaction plant.
The project is targeted to start production in 2011
The two companies are also in talks for a potential second LNG train with similar capacity when further gas reserves are proven.
Under the agreement, Arrow will have primary responsibility for all CSM project development activities while LNG Limited will focus on LNG project development work.
Arrow can acquire up to a 20% stake in Fisherman's Landing LNG and also has the option to acquire a 50% stake in any other CSM-to-LNG plants subsequently developed.
