Papua New Guinea is to become a gas processor after signing a deal with China National Petroleum Corporation, or CNPC, in Beijing last week.
The National newspaper reports that the Deputy Prime Minister and Minister for Petroleum and Energy, Sir Moi Avei, called it "the most beneficial and far-reaching agreement" reached between the State and a major overseas corporation since independence.
Sir Moi has not disclosed the value of the agreement.
He says it confirms PNG's special relationship with the world's largest country and the economic powerhouse in the region.
Under the deal, PNG and CNPC will begin exploring co-operation in the downstream processing of gas resources.
It includes an option to explore the construction of a northern gas pipeline that will include an integrated methane refinery complex in the Momase region, prodcuing LPG and compressed natural gas.