The agreement is for the sale and purchase of 825 petajoules gross of gas with first sales scheduled to commence on 1 January 2004.

"This is a significant milestone for the Bass Strait joint venture involving one of the largest sales of Gippsland gas since long-term supply arrangements were entered into with the Victorian Government in the late 1960s," said Philip Aiken, president and CEO for BHP Billiton Petroleum.

Currently, the majority of gas entering the South Eastern Australia gas market is supplied under a long-term contract between BHP Billiton/Esso and the previously State Government owned Gascor.

TXU is the third largest energy retailer in Victoria and has recently moved into South Australia. The company has also signed an agreement with the partners of VIC/P 44 area (Casino Field) in the Otway Basin for a long-term gas contract for the sale of natural gas.

Under the conditional agreement with the VIC/P 44 joint venturers TXU has agreed to purchase up to a total of 293 petajoules (PJ) of gas with an option to purchase, or an obligation to process, an additional 200 PJ.

The resulting contract quantity equals 493 PJ of gas beginning in 2006 and extending through to 2017.

In the 34 years since the BHP Billiton/Esso Bass Strait joint venture began production in October 1969, more than 3.5 billion barrels of oil and 5 trillion cubic feet of gas have been produced. Current production is around 120 thousand barrels per day of crude and condensate, and 570 million cubic feet per day of gas.

BHP Billiton and Esso are also continuing with exploration and production activity in the Gippsland Basin. In October the joint venture announced that it is planning to commence what is expected to be the largest combined exploration and production drilling program in the Gippsland Basin since the 1980s.

BHP Billiton has a 50% interest in the Bass Strait oil and gas project with joint venturer Esso Australia Resources Pty Ltd (50%, operator).