Planning is at an early stage, with the consortium, led by Perth-based Transborders Energy, targeting first production in mid-2026 at the earliest, with capital costs expected to be around A$1.6 billion ($1.1 billion), Managing Director Daein Cha said.

"Transborders' goal is to unlock stranded gas resources, develop a new LNG supply source and offer alternative LNG solutions," Transborders Chairman Jack Sato said in a statement.

Transborders hopes to complete preliminary design work on small-scale floating LNG (FLNG) with TechnipFMC and Norway's Add Energy and talks with potential owners of stranded gas resources by the end of this year.

Lining up Kyushu as a partner was key, Cha said, as the Japanese utility could be a customer for the LNG and could help the project secure access to low-cost debt finance from the Japan Bank for International Cooperation (JBIC).

"That enhances our relative competitiveness and cost-effectiveness when compared to other projects," Cha said.

The group is looking to tap small gas fields, with reserves of between 0.5 trillion and 2 trillion cubic feet, similar to a small-scale FLNG project that Norway's Golar recently set up off Cameroon.

The Cameroon project, producing 2.4 million tonnes a year, cost about $1.2 billion.

By contrast, Royal Dutch Shell's 3.6 million tonnes a year Prelude FLNG project was estimated to have cost $17 billion.

($1 = 1.4476 Australian dollars)

(Reporting by Sonali Paul in MELBOURNE and Aaron Sheldrick in TOKYO; editing by Christian Schmollinger)