THE stalled $1.1 billion Fisherman's Landing liquefied natural gas project in Queensland is set to be revived through a partnership with Chinese oil and gas behemoth PetroChina.

As exclusively revealed by The Australian yesterday, Melbourne-based Molopo has sold its Queensland coal-seam gas assets to PetroChina for $41 million.

The Chinese group will now begin talks with LNG Limited, which is behind the proposed Fisherman's Landing liquefied gas plant at the port of Gladstone, over a tolling agreement for gas from the Molopo acreage processed to be in the plant.

Fisherman's Landing is expected to produce up to 3 million tonnes a year of LNG, making it the smallest of the five LNG plants under construction or planned for development around Gladstone. LNG managing director Maurice Brand said the PetroChina deal would add "some serious momentum" to the company's efforts to develop Fisherman's Landing.

A subsidiary of PetroChina's state-owned parent company, CNPC, purchased a 19.9 per cent stake in LNG last year.

Mr Brand indicated LNG and PetroChina would keep looking for sources of gas for Fisherman's Landing, with the company continuing to run due diligence on Australian-listed coal-seam gas producer WestSide Corporation.

"We've really been in the wilderness for two years while we've been putting a lot of ducks in a row and doing the work behind the scenes," Mr Brand said.

"This will now start to move things quite aggressively forward and we'll be saying a lot more over the coming months."

Fisherman's Landing could leapfrog PetroChina's existing Arrow Energy joint venture with Royal Dutch Shell in the pipeline of LNG projects planned for Gladstone. It would take about 2 1/2 years to build Fisherman's Landing once sufficient gas supplies were identified.

PetroChina and Shell together spent more than $3.6bn acquiring coal-seam gas duo Arrow Energy and Bow Energy, but Shell chief executive Peter Voser has indicated a development decision on the LNG project could be delayed due to rising cost pressures. Shell has a large portfolio of other LNG developments in Australia.

The purchase price is less than Molopo's carrying value for the assets, meaning it will have to recognise a $24m impairment in its accounts. Managing director Tim Granger said the low price reflected challenges in the market and the coal-seam gas sector. Molopo shares ended up 3c to 45c, and LNG gained 0.5c to 37c.