Gas producers Liquefied Natural Gas Ltd (ASX: LNG) and Metgasco Ltd (ASX: MEL) said on Monday that they have struck a deal to collaborate on the possibility of producing liquefied natural gas (LNG) from regular gas LNG's Gladstone project in Queensland.

The joint undertaking will also see the likelihood that the two firms cooperating in establishing a new LNG plant in Brisbane while Metgasco mulls the possibility of developing its own offshore LNG project. Both are slated to be supplied by Metgasco's Clance Moreton facility in northern New South Wales.

The two gas companies' joint study will also consider linking a supply pipeline into LNG Ltd's Gladstone plant off the coast of central Queensland while the feasibility of a potential LNG project within the Port of Brisbane was left open by the new partners.

Metgasco said in its statement that it has initiated feasibility studies that would evaluate the viability of the company's entry into the export markets where the firm "intends to evaluate the commercial, environmental and technical feasibility of a number of export LNG options and form a view on whether an LNG export project is commercially feasible."

Metgasco said that once its comprehensive study showed that the commercialisation take could lead into considerable merits for the company, a preferred LNG project for the gas producer should be a near realisation for Metgasco by 2011.

The company also revealed that it has signed a memorandum of understanding (MoU0 with FLEX LNG Ltd of Norway for a possible LNG floating offshore project, as it stressed that "unlike other Australian coal seam gas projects, Metgasco's resources are located close to the coast, making floating LNG a commercial possibility."

Metgasco managing director David Johnson said that the company's initiative of developing export opportunities for its Clarence Moreton basin gas yields would lead to substantial economic and employment benefits for the NSW area.