The 50/50 joint venture partners will each fund about US$300 million (A$406.83 million) in project costs, which includes the field development and a 10-year FPSO minimum service agreement. BHP is the project operator.

With first oil expected in early 2008, the joint plans to operate the field for 20 years. Production is forecast at 80,000 barrels per day.

Discovered in February 2003, Stybarrow and the adjacent small oil rim of the Eskdale field are estimated to contain recoverable oil reserves of between 60 and 90 million barrels of oil, according to BHP Billiton president of energy, Philip Aiken.

"Stybarrow represents the first opportunity for BHP Billiton to commercialise reserves in the Exmouth sub-basin, which is increasing in importance as an oil province in Australian waters," he said.

"Our focus in the region is in on seeking opportunities where discoveries can be appraised and rapidly advanced into developments."

In a separate announcement, Woodside said the project would also boost its oil production in the region, with the nearby Enfield oil project planned to start production in late 2006.

The Stybarrow project underwent a comprehensive environmental impact assessment process involving extensive consultation with the local community and other key stakeholders, according to BHP.