The initial contract is to supply 225 petajoules of gas over a primary term of 15 years, beginning in 2009.

Beach said it includes an option for additional gas supply, providing growth opportunities for all parties.

Alinta will use the gas to supply the Tamar Valley Power Station, in Tasmania, which will be a gas-fired combined cycle power station, it said.

The signing of the agreement provides for a further expansion in the development of the Basker Manta and Gummy fields, which began less than two years ago

“The joint venturers will now proceed with the process leading to final investment decision,” Beach said

“Major equipment selection and process design completion is imminent.”

The deal is conditional and subject to a FID by the joint venturers.

Development of the BMG project began with a focus on producing oil from the Basker and Manta fields, based on initial proved and probable (2P) reserves estimates of around 23 million barrels (MMbbl).

Beach said new wells drilled in 2006 have led to much greater expectations of the project’s potential, with 2P oil reserves now at nearly 40MMbbl and a nearly quadrupled estimate of the gas condensate resource.

The expected life of the fields has nearly trebled, up to 17 years from an initial expected life of six years.

The gas development is expected to be carried out in tandem with further development of the oil reservoirs, Beach said.

Three new oil wells are scheduled to be drilled later this year, while up to three gas wells are planned to be drilled in the Manta and Gummy fields next year.

The gas development will include a gas processing facility and a pipeline to shore.

Meanwhile, Anzon said it is planning additional exploration in the BMG area in the next 18 months.

“Fresh reprocessing and evaluation of the existing 3D seismic data will be followed by field exploration, most notably at the Chimaera prospect immediately north of Manta field, as well as extensions to Manta itself,” it said.

“The results of this exploration work are anticipated to further expand the reserves to build on the successful track record that has been established.”

Beach is the 50% owner of the BMG fields with the remaining 50% owned by operator, Anzon.