A major new oil project off Western Australia is being hailed as an important step for the nation's oil security.
Federal Resources Minister Keith Pitt announced on Tuesday that Santos and its partner Carnarvon Energy now have a production licence covering the Dorado oil field, about 150km north of Port Hedland.
Two weeks ago, the Pavo-1 exploration well drilled 46km east of the Dorado field confirmed the area as one of the largest offshore oil discoveries on Australia's North West Shelf.
Santos CEO Kevin Gallagher said the licence was an important step toward a final investment decision on the Dorado project, in the Bedout Sub-Basin in Australian waters.
Mr Pitt said the "low emissions intensity development" would initially concentrate on oil production.
"This multi-billion project will enhance our oil security for the future," he said.
"Given current uncertainty around the world we must maintain our focus on developing our traditional oil and gas along with new energy metals and materials."
Santos has described Dorado as "a very low CO2 reservoir with approximately 1.5 per cent CO2".
All gas will be reinjected in the initial phase, making it one of the lowest emission intensity oil projects in the region, according to the company.
Mr Gallagher said oil and gas markets are seeing increased volatility and western countries are looking to diversify their supply sources away from Russia, one of the world's leading producers.
"In this environment, Dorado and Pavo have the potential to bolster Australia's national energy security while Australian LNG projects help to meet the energy needs of our allies," he said.
Later production will recover natural gas for use in WA.
The development comes as the latest international climate change report says the world is at a "crossroads" and must use less oil.
"Limiting global warming will require major transitions in the energy sector," the report said.
A substantial reduction in fossil fuel use, widespread electrification, improved energy efficiency, and use of alternative fuels such as hydrogen are recommended.
