The government approval is the finishing touch in a deal that sees Rift gain full ownership of PPLs 261 and 235 from Austral along with the Coral Sea Rig - which is drilling Puk Puk-1, some 25km from its Douglas-1 well.

Rift chairman Ian Gowrie-Smith said he was delighted the matter had been brought to a close so rapidly.

"We can now concentrate 100 percent on the development of our prospects within PNG, which are already attracting considerable interest from possible commercialisation partners," he said.

"We are continuing our development of these prospects apace and look forward to reporting on further progress at Puk Puk and Douglas shortly."

Meanwhile, drilling at Puk Puk-1 - which means crocodile in pidgin - is at 1600m of its total planned depth of 2100m with Rift saying it is approaching the target zone.

Once drilling at the well has been flow-tested, Rift will flow test Douglas-1.

Rift has also begun a 200km seismic program for PPLs 235 and 261 with the Douglas-1 camp used as a base for initial work in the former, and a northerly site to be established for seismic in the latter licence.

The termination of its JV with Austral means Rift and Rio Tinto Alcan are the remaining parties to a non-binding memorandum of understanding made late last year to investigate the supply of around 40 billion cubic feet per annum of natural gas to Alcan's Gove Alumina plant, in Australia's Northern Territory, for 20 years after initial production is achieved.

The supply of the gas - should sufficient reserves be proven - was proposed to be via a direct pipeline covering 300km from the Douglas discovery to the coast then another 600km offshore to the Gove alumina complex.

Under the MOU, Rift is required to carry out an active drilling campaign during the first six months of 2008.

Having recently signed a heads of agreement with Flex LNG, a Norwegian floating LNG specialist, to develop a floating liquefaction plant in offshore PNG, Flex has one of its floating plants on order.

In its floating LNG plans with Flex, Rift could potentially receive a stronger profit margin for its gas than previously expected with its Alcan arrangement.

Puk Puk-1 in PPL 235 is targeting estimated recoverable reserves of about 226 billion cubic feet of gas and is targeting a separate structure from Rift's Douglas gas discovery.

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