Flex, a Norwegian floating LNG specialist, said the project is expected to produce about 1.5 million tonnes of LNG per annum with start-up targeted for the first half of 2012.

"By selecting a floating liquefaction solution, LNG production could start several years earlier compared to a traditional onshore project," Flex chief executive Philip Fjeld said.

"The project structure builds on the model for monetising stranded gas resources which has been developed in relation to the recently announced Peak project offshore Nigeria.

"Both parties will also be open to processing third-party gas reserves that are commercially stranded and that can be tied into the project."

Rift had recently gained 100% ownership of its Papua New Guinea licences PPL 261 and PPL 235 in an out of court settlement with former partner Austral Pacific Energy.

PPL 235, which includes the Douglas gas field that was discovered in 2006, has estimated reserves of about 798 billion cubic feet.

The company is also currently drilling the Puk Puk-1 exploration well in PPL 235 that targets estimated recoverable reserves of about 226Bcf in a separate structure from Douglas.