Santos Ltd., the third largest oil and gas producer in Australia, announced today that its Gladstone liquefied natural gas joint venture with Malaysia's Petroliam Nasional Bhd. Won the approval from the Queensland government. Santos became the first company to receive environmental approval from the state government for its liquefied natural gas project.

The project now just needs to get approved by the federal government for further proceedings.

Queensland Premier Anna Bligh said in the statement today that the Coordinator General Colin Jensen cleared the Gladstone LNG venture, with strict conditions, after reviewing the development's expected environmental impact.

The Gladstone LNG project has got the approval for the development of coal seam gas resources in Bowen and Surat Basins in the state. The government also approved the construction of a pipeline from the fields to the coast and the building of as many as three processing units.

According to the state government, the project would start shipping supplies by the year 2014. Initially, the project is expected to produce between 3 million and 4 million metric tons of LNG per year.

The project has the potential to increase its capacity to 10 million tons of LNG per year. The expected cost of the project is around $A7.7 billion.