Phillips Petroleum Co., Bartlesville, Okla., parent company of Darwin LNG Pty Ltd. and other Australian affiliates, signed an agreement that enables it and its co-venturers to move ahead with the gas development of the Bayu-Undan project in the Timor Sea.

Darwin signed a heads of agreement (HOA) with Tokyo Electric Power Co. Inc. and Tokyo Gas Co. Ltd. detailing terms for the sale of 3 million tons/yr of liquefied natural gas (LNG). The agreement covers a 17-yr period, with the first cargo scheduled for January 2006. The LNG will be sold on a free-on-board basis.

The HOA paves the way for Phillips' plan to develop an LNG facility at Wickham Point near Darwin, Australia, using the company's proven optimized cascade LNG process.

The fully integrated development of Bayu-Undan, including the pipeline and LNG plant, is estimated to cost roughly $3 billion.