discussion with co-ventures in next 2 months

Under the deal, Icon can source gas for its LNG project from its own existing fields and joint ventures, third parties or new tenements or joint venture partners. The supply terms give Icon flexibility to supplement its own reserves with suitable contracted third-party feedstock gas, which could unlock stranded gas in Queensland and elsewhere, according to the company's Managing Director Ray James.

"I envisage commencing discussions with identified and prospective co-venturers in the next couple of months, with a view to building Icon Energy's gas bank," James said.

"Another critical term of the agreement with Shantou SinoEnergy is that Icon Energy is not locked into supplying LNG from a single nominated port," he added. "We have already considered Queensland and South Australia-based options and are currently in the process of reviewing cooperative arrangements with one of the many Gladstone LNG projects for supply out of Queensland."

James said the supply agreement was a valuable commercial asset, which had been negotiated in parallel with the company's drilling development plans. Reserves cannot be certified unless a market exists for them, in accordance with international protocol, he added.

Icon plans to elaborate on prospective feedstock, supply, development and tolling options once discussions are at a more mature stage, James said. He added it was also premature to comment on funding and investment options, but indicated that talks were underway with preferred advisers with a view to securing project investment.

"Our strategy to pursue targeted commercialization opportunities in parallel with our operations, rather than waiting to identify markets subsequent to drilling, has paid off," James said.

Under the project timetable, first delivery of LNG is scheduled by June 30, 2016.

The gas contract price "has been competitively set" with regard to the price of LNG in China and is linked to the price of Tapis crude oil in Singapore, Icon said. The price is to be reviewed every three years, the company added.