The Australian government Wednesday gave conditional approval on environmental grounds for an expansion of the proposed giant Gorgon liquefied natural gas project offshore of Western Australia.

Chevron Corp. (CVX), the project operator and 50% stakeholder, immediately welcomed the approval and said the joint venture partners will make a final investment decision on Gorgon in coming months.

The expansion is for a third train on top of two trains contained in an initial proposal that was approved by the previous federal government and that has also been approved by the Western Australian state government.

The A$50 billion project is Australia's largest single resource project and is set to deliver significant economic benefits and create around 10,000 indirect and direct jobs in peak construction, Managing Director of Chevron's Australian unit, Roy Krzywosinski, said.

Australian Environment Minister Peter Garrett has imposed an additional 28 conditions to the project.

"It is acceptable for the expansion to go ahead subject to the conditions," he told reporters. "The public can have confidence that the environment of Barrow (Island) will be properly protected" given the conditions, he said.

Barrow Island is where the gas processing plant for the Gorgon field will be located.

Garrett said his responsibilities were confined to considering the likely impact on listed threatened species and other national environment issues.

"I'm confident that in making this decisions I've observed all regulatory requirements that I'm required to do under the legislation," he said.

The company will be more than willing to meet the extra conditions because under the terms of this particular approval the government is required to work with the company and for the company and the Commonwealth to agree those conditions, he said.

Chevron must now prepare approval plans for the protection, management and monitoring of protected animals at the project site, including the spectacled hare-wallaby, burrowing bettong and golden bandicoot.

Also, Chevron must contribute A$62.5 million to the northwest shelf flatback turtle conservation program.

Krzywosinski said the project has been sited to avoid areas of particular conservation significance and the three-train LNG development will have minimal environmental impact when compared with the already-approved two train project.

The Gorgon field has potential reserves of more than 40 trillion cubic feet of gas and an estimated economic life of at least 40 years from the time of startup.

It is being developed by Chevron, ExxonMobil Corp. (XOM) and Royal Dutch Shell PLC. (RDSB). Shell and Exxon each have a 25% stake in the project, which includes three 5.0 million metric tons a year LNG plants, one of the largest carbon dioxide injection projects and a domestic gas plant.

Exxon has struck two deals over Gorgon LNG so far this month, including a 20-year deal with PetroChina Co. (PTR), the listed unit of China National Petroleum Corp., to buy 2.25 million metric tons of LNG a year, and a 20-year agreement to sell 1.5 million tons to Petronet LNG Ltd. (532522.BY), India's largest LNG importer.

-By Ray Brindal, Dow Jones Newswires;

61-2-6208-0902; ray.brindal@dowjones.com