Under the deal, the two companies will jointly develop the Overston gas discovery in an area of interest defined by the existing 3D seismic survey.

Sunshine today said both companies would appraise the gas discovery and secure proved and probable gas reserves and a gas offtake agreement.

It said if Sojitz is reasonably satisfied with the findings of the appraisal, it would participate at an agreed working interest level in a production licence.

In return it will fund the field development, the construction of the infrastructure and a recognised reserves certifier, who will work with Sunshine Gas to assess and certify the reserves potential of Overston.

The Overston resource is contained in the Permian-aged Tinowon sandstone unit. The Queensland-based company said to date, two wells have been drilled into the Tinowon and both have encountered gas.

Although there is a mapped structural closure at Overston to constrain the gas, it is possible that there is a stratigraphic component to the accumulation, it said.

“The existence of this stratigraphic component would have a significant impact on the size of the resource,” Sunshine said.

“A technical work program has been developed to determine the presence of the stratigraphic trapping component to the Overston gas accumulation.”

Sotjiz is a trading company with a range of activities, including energy resources, in about 50 countries worldwide, and has upstream oil and gas interests in the United States, United Kingdom, Qatar, Brazil, Gabon, Egypt and Indonesia.

Sunshine listed on the Australian Stock Exchange in July 2002 and has a 100% interest in ATP 645P.