Australia has signaled it is open to a floating liquefied natural gas processing facility, offshore, for the massive Woodside Browse LNG project.

Federal Resources Minister Gary Gray on Friday informed the Woodside consortium -- which includes Shell, PetroChina and Japan's Mitsubishi and Mitsui -- that he approved changes to the leases held by the companies, waiving the conditions requiring the consortium to process its Browse gas onshore at James Price Point in Western Australia.

Shell, which increased its stake in the Browse project to 27 percent last year, has been pushing for the offshore alternative, with its floating natural gas processing technology, or FLNG, seen as a logical alternative to onshore processing of Browse gas.

The Browse gas fields include the Torosa, Brecknock and Calliance discoveries, which are estimated to contain a total of about 13.3 trillion cubic feet of dry gas and 360 million barrels of condensate.

"The decision to vary the Browse retention leases was taken to ensure the timely development of these gas resources for the benefit of the Australian, Western Australian and Kimberley coast economies," Mining Weekly reported Gray said.

The condition for onshore processing has been removed from five of the seven leases located in the Commonwealth of Australia but those conditions still remain on the two Western Australia-controlled leases.

Gray had long been supportive of the consortium's preference to develop the Browse fields using FLNG, agreeing that an onshore processing plant would not be economically viable.

But Western Australian Premier Colin Barnett -- who has a say over the manner in which the other two of seven Browse leases are developed -- has pushed for onshore, rather than floating, processing of the gas, arguing that offshore operations would deprive the state of jobs and economic benefits.

Barnett hinted Sunday he might also approve changes to the two leases if the consortium committed to building a supply base at James Price Point to service Browse Basin's oil and gas sector, as that would allow "future LNG to come onshore," The West Australian reported.

"There are other companies operating in the Browse Basin that intend to do LNG onshore, not offshore," Barnett told the newspaper.

The Western Australian Chamber of Minerals and Energy welcomed Gray's decision.

"Australia is currently a high-cost operating environment and must remain internationally competitive in order to attract investment for large resource projects," the chamber's chief executive, Reg Howard-Smith, said in a statement.

"Any loss of development options lessens Australia's ability to compete with other energy rich countries."