Hess Corporation has signed a non-binding Letter of Intent (LOI) for the processing of natural gas from its Equus project offshore northwestern Australia into liquefied natural gas (LNG).

Under the agreement with North West Shelf (NWS), Hess will toll the production through existing NWS processing and liquefaction facilities in Karratha, Australia, and then market the LNG to customers in the Asia Pacific region.

NWS is a joint venture between BHP Billiton Petroleum (North West Shelf) Pty Ltd, BP Developments Australia Pty Ltd, Chevron Australia Pty Ltd, Japan Australia LNG (MIMI) Pty Ltd, Shell Australia Pty Ltd and operator Woodside Energy Ltd.

According to the Sydney Morning Herald, Hess has been negotiating with owners of LNG processing plants in Western Australia for several years, after deciding against building its own LNG infrastructure to process its gas discoveries in the WA-390-P and WA-474-P permits that contain the Equus fields.

Based on the LOI, Hess and NWS plan to conduct joint engineering studies and further progress commercial discussions.

"This arrangement would bring together Hess' strong deepwater drilling and development capabilities with NWS's proven track record in natural gas processing and liquefaction," commented Greg Hill, president and chief operating officer of the U.S. oil company. "The combination provides an attractive option for Hess to commercialize its important Equus natural gas resource in a manner that delivers secure, reliable energy supplies into Asia Pacific LNG markets and creates value for our shareholders."