The agreement covers gas to be produced from the next 100 production wells within Stage Two of the Camden Gas Project, located about 50km soutth-west of Sydney.

While SGC said the terms of the agreement are confidential, it is known that AGL Wholesale Gas will purchase up to 10 petajoules (PJ) of gas per year from Sydney Gas for the next 10 years.

"This is of tremendous importance to the company from a financial perspective," SGC said in a statement to the Australian Stock Exchange. "This means that the first 125 wells within the 300 well Camden Gas Project are now covered by sales contracts at competitive prices with one of Australia's largest gas retailers and distributors."

SGC chief executive Dr Bruce Butcher said it was now the company's goal to be producing and selling gas from 40 wells within Stage Two by the middle of next year. "That, we believe, could generate revenues in excess of $10 million per annum and put us into a positive operational cash flow position for the very first time," he said.

SGC said work was now underway on construction of the second gas treatment plant and an underground high pressure steel sales line from the plant to the main AGL-operated gas transmission line.