Malaysia’s Petroliam Nasional Bhd (Petronas) has acquired 40% interest in a proposed integrated LNG project in Gladstone, Queensland, for around $2.5bn from Australia’s Santos Ltd.

The deal comprised an initial payment of $2bn and a further payment of up to $500m upon a final investment decision approval for a second LNG train, Petronas revealed in a company statement.

Under the terms of the agreement, a new 60/40 joint venture company will be set up to develop and operate a gas liquefaction facility at Gladstone, with an initial one-train capacity of three million tpa. The new entity will also build and operate a 450km pipeline from jointly-owned upstream coal steam gas (CSG) assets to the project site, as well as undertaking all marketing activities for the project’s LNG output.

Petronas said the partners would also cooperate in the exploration and production of selected upstream CSG assets in Queensland, with Santos as the operator.