PRODUCTION of the first liquefied natural gas has started from the Santos-operated Gladstone LNG project on Curtis Island, on schedule and within budget.

At the time of going to press, LNG being produced from Train 1 was being loaded onto Malaysian LNG tanker Seri Bakti, bound for South Korea in coming weeks.

Santos said work was progressing well on Train 2, with the facility expected to be ready for start-up by the end of the year.

Company managing director and chief executive David Knox said this was the most significant milestone for the company’s first operated LNG project.

“We said we’d produce first LNG around the end of the third quarter, and that’s exactly what we’ve done,” Mr Knox said.

“Our upstream facilities are fully operational and performing well, we’re producing LNG on Curtis Island, and we’re now looking forward to safely delivering our first LNG cargo in the coming weeks.”

Santos is the operator and has a 30 per cent interest in the project. Other co-venturers include Malaysia’s Petronas (27.5%), France’s Total (27.5%) and South Korea’s KOGAS (15%).

Mr Knox thanked the joint venture partners in the project for their support, saying that production revenue from the project was underpinned by binding long-term LNG sales contracts covering more than 90% of the plant’s capacity.

Santos GLNG project involved ongoing gas field development in the Surat and Bowen basins, a 420 kilometre gas transmission pipeline and construction of an LNG plant on Curtis Island, near Gladstone.

When fully operational the project will have the capacity to produce 7.8 million tonnes of LNG each year.