The new plant, which is yet to receive regulatory approval, will process gas from Kipper Tuna Turrum Project, the largest domestic gas development in Australia.

In addition, the facility is expected to process nearly 400 million standard cubic feet of gas per day and it will add carbon dioxide removal capacity to the Longford gas plant.

Construction of the gas conditioning plant is expected to commence in 2013 and cleaner and saleable gas production from the facility is anticipated to begin 2016.

BHP and Esso have equal interests in the Gippsland Basin Joint Venture. Esso Australia is the operator of Longford Gas Conditioning Plant (LGCP).

BHP will invest A$520m ($547.7m) for the LGCP project, while Esso will invest A$500m ($527m) in it.

ExxonMobil Australia chairman John Dashwood remarked that the consumption of energy in Australia will grow in the coming 20 years.

"The gas conditioning plant will process gas to help meet this expected increase in demand. And because of its cleaner-burning qualities, natural gas is a powerful option for reducing the environmental impact of energy use," Dashwood added.

BHP Billiton Petroleum chief executive J Michael Yeager said, "The Longford Gas Conditioning Plant is a necessary extension of Bass Strait infrastructure to enable valuable hydrocarbon liquids production and domestic gas supply for years to come."