Adds drilling details paragraphs 3-4, adds gas policy detail paragraph 7, adds additional drilling background paragraphs 9-10

By Helen Clark

PERTH Dec 5 (Reuters) - The Australian unit of U.S. oil giant Chevron CVX.N said on Friday that the partners of the Gorgon Joint Venture have sanctioned the A$3 billion ($1.98 billion) Gorgon Stage 3 development off Western Australia's northwest coast.

The development will be used as backfill for the existing LNG export concern and will link the offshore Geryon and Eurytion natural gas fields to Gorgon's existing infrastructure on Barrow Island.

Chevron will drill a maximum of 40 wells across seven fields with a notional field life extending to 2070.

The project proposal was accepted in November by the offshore environmental regulator after being submitted for public comment by Chevron in August 2024.

The Chevron-operated Gorgon Project is a joint venture among the Australian units of Chevron, Exxon Mobil XOM.N, and Shell SHEL.L, which collectively own roughly 97.3%, with Japan's Osaka Gas 9532.T, JERA and U.S.-based firm MidOcean holding the remaining stake.

In addition to LNG exports it will enable the long-term supply of domestic gas for Western Australia households and industry, Chevron Australia president Balaji Krishnamurthy said.

The state has a mandated 15% reservation policy for domestic use for all LNG projects.

Gorgon has the capacity to produce 300 terajoules per day of gas for the Western Australia market and 15.6 million tons of LNG per year, said Chevron Australia.

Last week, Shell’s plans for drilling at the Crux field, also offshore northern Australia, were accepted by the regulator. Crux’s gas will be sent as backfill to the Prelude floating LNG vessel.

In southern Australia, U.S. oil company ConocoPhillips COP.N has just finished its first exploration well in the region and will now move to a nearby location for a second well.

($1 = 1.5135 Australian dollars)

(Reporting by Sherin Sunny in Bengaluru; Editing by Alan Barona and Thomas Derpinghaus)

((Sherin.Sunny@thomsonreuters.com))