MELBOURNE/TOKYO, June 17 (Reuters) - Japan's Kyushu Electric Power Co agreed to back a study to produce liquefied natural gas (LNG) using floating LNG vessels at small, remote gas fields that would otherwise be untapped off Australia, the project partners said on Monday.
Planning is at an early stage, with the consortium, led by Perth-based Transborders Energy, targeting first production in mid-2026 at the earliest, with capital costs expected to be around A$1.6 billion ($1.1 billion), Managing Director Daein Cha said.
"Transborders' goal is to unlock stranded gas resources, develop a new LNG supply source and offer alternative LNG solutions," Transborders Chairman Jack Sato said in a statement.
Transborders hopes to complete preliminary design work on small-scale floating LNG (FLNG) with TechnipFMC and Norway's Add Energy and talks with potential owners of stranded gas resources by the end of this year.
Lining up Kyushu as a partner was key, Cha said, as the Japanese utility could be a customer for the LNG and could help the project secure access to low-cost debt finance from the Japan Bank for International Cooperation (JBIC).
"That enhances our relative competitiveness and cost-effectiveness when compared to other projects," Cha said.
The group is looking to tap small gas fields, with reserves of between 0.5 trillion and 2 trillion cubic feet, similar to a small-scale FLNG project that Norway's Golar recently set up off Cameroon.
The Cameroon project, producing 2.4 million tonnes a year, cost about $1.2 billion.
By contrast, Royal Dutch Shell's 3.6 million tonnes a year Prelude FLNG project was estimated to have cost $17 billion.
$1 = 1.4476 Australian dollars Reporting by Sonali Paul in MELBOURNE and Aaron Sheldrick in TOKYO; editing by Christian Schmollinger