PERTH (miningweekly.com) – Oil and gas major Santos has made the first shipment of liquefied natural gas (LNG) from the $18.5-billion Gladstone LNG project (GLNG).

The cargo was bound for South Korea.

“This is the largest project we have ever undertaken as a company and I am so proud that we have been able to deliver this on time and within budget.

“The first cargo from GLNG strengthens our position as a major competitive LNG supplier to Asia. GLNG is a robust project and will generate strong cash flows for the business for decades to come,” Santos MD and CEO David Knox said.

The Australian Petroleum Production & Exploration Association (Appea) said on Friday that the first LNG from GLNG highlighted Australia’s emergence as a world leader in the global LNG industry, despite the downturn in crude oil and LNG prices.

Appea CEO Dr Malcolm Roberts said Australia’s enormous natural gas reserves and Asia’s thirst for clean and reliable energy have seen an unprecedented level of investment in Australian projects in recent years, with the country remaining on track to become the world’s leading LNG producer by 2018.

“Fortunately for Australia and the companies involved much of the infrastructure needed to export LNG is either completed or nearing completion,” he added.

“While the oil and gas industry faces the same headwinds as other commodities, we are resilient enough to fend off the latest industry challenges.”

The Queensland Resources Council (QRC) also welcomed first production, with CEO Michael Roche saying there was great symbolism in the LNG cargo departing for South Korea in the week when the QRC launched its 2014/15 Economic Contribution Report.

“Today is the perfect illustration of the contribution that the resources sector makes to the Queensland and Australian economies,” he noted.

“After an unprecedented investment and construction period in the gas industry, Queensland and companies like Santos are now reaping the rewards of the hard slog of the past few years.”

Roche said the Queensland economy and gas sector were now returning to a more normal phase where production and operational expenditure dominated the resources sector.

He noted that Queensland's budget was starting to reap the benefits as well, with Treasury expecting to receive royalties from gas companies this financial year of over A$100-million, rising to over A$500-million by 2018/19, revenue that can pay for schools, hospitals and roads throughout the state.

The GLNG project involved the development of gasfields from the Bowen and Surat basins in south-western Queensland and transporting the gas through a 420 km underground pipeline to a two-train LNG plant on Curtis Island, off the coast of Gladstone, with the capacity to produce 7.8-million tonnes of LNG a year at full capacity.

Production from the first train started in September and work on the second train was continuing to progress well, with the second train expected to be ready for start-up by the end of the year, and first LNG planned for the second quarter of 2016.