Under the deal uncontracted gas from Arrow’s Surat Basin fields would flow to the QCLNG project (involving Shell, CNOOC and Tokyo Gas) that would then sell gas to local customers and also export it through its gas plant on Curtis Island.

Shell chairman Zoe Yujnovich said the deal paved the way for a staged development of Arrow’s world class gas resource.

Ms Yujnovich said QCLNG had existing pipelines, processing plants and had developed ways of supplying gas to both local and international customers – while Arrow had developed the expertise needed to extract gas from its fields in the Surat Basin.

“Onshore gas developed in Queensland has none of the oil produced by traditional gas fields, and is expensive to develop – so without the scale of LNG development it would simply stay in the ground”, she said.

“The Arrow JV partners showed restraint earlier this decade by not building another two trains on Curtis Island, but that doesn’t change the need for scale that only LNG demand can provide.

“The path forward for Arrow that is made possible by today’s announcement would see the venture sell its gas to QCLNG upstream of existing pipelines and treatment facilities.

“QCLNG’s existing connection points with the gas market would enable Arrow to reduce development cost – making projects investable despite challenging market conditions.”

Ms Yujnovich said that gas from Arrow would provide more supply to Australian customers, while also providing gas to job creating export projects in Gladstone.

“When more gas is developed, everyone wins – Australians win again because there is more gas to heat our homes and provide energy to our factories and exporters win because they have more gas to feed their job creating export projects”.

Arrow’s upstream developments will require consideration of detailed investment cases by joint venture partners