OSLO (Bloomberg) — Liquefied Natural Gas Ltd., the developer of export projects too small for major suppliers, said its $500 million plant in Australia is set to get the go-ahead by the year-end after an investment by Bermuda-based Golar LNG Ltd.

Golar, a operator of LNG tankers with an operational base in Norway, will take a 40 percent stake in the project in Queensland state and invest about $100 million of equity in the venture, Maurice Brand, managing director of Perth-based LNG Ltd., said yesterday. LNG Ltd. selected Golar from four international companies that made investment proposals, he said.

LNG Ltd.'s Fisherman's Landing project at Gladstone port is due to start production in 2012, in advance of larger rival ventures planned in the area by companies including BG Group Plc and Santos Ltd. The agreement with Golar should help ensure it will be the first of the ventures, which are all planning to convert coal-seam gas into LNG, to start production.

The accord with Golar "is a milestone event for the company today but there is a lot more to be done as we move forward to close the project out during 2009", Brand said on a conference call. Government approvals for the plant are expected by July, while the port licenses should be in place by September, he said.

Golar, which will also buy all the output from the 1.5 million metric-ton-a-year plant, is in talks with two potential customers in Asia for the on-sale of the LNG, Brand said in an interview.

The estimated cost of the plant, which will be half funded by debt, doesn't include investments for the supply of gas by Arrow Energy Ltd., Brand said. Golar is already LNG Ltd.'s largest shareholder with a 16 percent stake.

LNG Ltd. dropped 2.5 Australian cents, or 3.8 percent, to 63.5 cents on the Australian stock exchange, after earlier rising as high as 77 cents. The move compared with a 1.4 percent slide in the exchange's benchmark energy index.

LNG Ltd.'s directors considered that Golar's proposed investment "would deliver the best outcome for the company and materially assist with first LNG delivery in late 2012", Brand said yesterday in a statement to the exchange.

LNG Ltd. also renewed an initial agreement with Brisbane-based Arrow, Royal Dutch Shell's Australian partner in coal seam gas, for the supply of gas to the project. Under the accord, which is due to be firmed into a contract in September or October, Arrow has the exclusive right to supply gas to the first production plant and an option to supply gas for a second unit.

Arrow is bidding against BG Group Plc for Pure Energy Resources Ltd., a coal-seam gas explorer in Queensland, as it seeks to build reserves for LNG supply projects. It may also supply gas extracted from coal seams to an LNG venture being studied by Shell in Gladstone, Shaun Scott, chief executive officer of Arrow's Australian business, said earlier this month.

Shell's potential venture is a longer-term project and isn¿t in competition with the Fisherman¿s Landing venture, Brand said today.

LNG is gas chilled to liquid form for transportation by tanker to destinations not connected by pipeline.