The Brisbane-headquartered company announced today that it has signed a heads of agreement with Japan’s Sojitz Corporation to jointly develop a 500,000 tonne per year LNG plant using gas from Sunshine’s Lacerta CSM project.

The companies are also discussing the possibility of using gas from other CSM fields owned by Sunshine to supply additional feedstock to the project.

Sunshine’s proposal is smaller than two similar proposals by Arrow Energy and Santos, which aim to build 1 million tonnes per annum and 3-4MMtpa plants respectively at Gladstone port.

Under the HOA, Sojitz will have a 70% operating stake in the LNG plant, with Sunshine Gas holding the balance.

The two companies are also contemplating the direct upstream involvement of Sojitz in the Lacerta Project at up to a 20% interest level.

Located in ATP 795P, the Lacerta CSM project has 3P reserves (proven, probable and possible) of 1097 petajoules, including 469PJ in the 2P category and 44PJ of 1P reserves.

Sunshine said it expected Lacerta’s 1P and 2P reserve volumes to significantly increase over time with further production programs.

Sunshine Gas managing director Tony Gilby said work on permitting by consultant RLMS would start immediately, while front-end engineering and design was scheduled for the first quarter of 2008.

Gilby said the parties aimed to have the project’s bankable feasibility study completed by the end of calendar 2008 and production underway in the first quarter of 2012.

“Sojitz is a major player in the global energy market and has brought together a first-class international engineering firm, as well as a leading energy marketer [as LNG Japan], to deliver the key project elements,” he said.

Gilby said the project had the potential to be of great economic significance to Sunshine Gas by transforming the company into a major Australian energy supplier and exporter.

“Apart from the creation of hundreds of construction and permanent jobs, the development of this project would generate significant export income for Australia and open up Queensland’s CSM gas supply market to the benefits of international pricing,” he said.

He said the parties were in advanced negotiations with the Queensland Government to secure an appropriate site in Gladstone for the LNG plant.

“The plant, designed initially to produce 500,000 tonnes of LNG a year, will be smaller than others that have been publicly proposed to date,” he said.

“However, we think this factor, combined with the calibre of our partner Sojitz Corporation and that of the other participants, will deliver a significant strategic advantage by allowing us to expedite development.”