The Federal Government has awarded a $6 million grant to a gas producer wholly owned by a massive Chinese company said to have close links to the country's Communist Party.

Key points: Four companies have been awarded matching grants by the Federal Government to invest in infrastructure to boost domestic gas supply

Four companies have been awarded matching grants by the Federal Government to invest in infrastructure to boost domestic gas supply Chinese-owned Landbridge Group subsidiary Westside will receive $6 million under the scheme

Chinese-owned Landbridge Group subsidiary Westside will receive $6 million under the scheme Landbridge holds the 99-year lease of Darwin Port, a deal that angered the United States Government when it was made in 2015

Federal Resources Minister Matt Canavan announced grants to Westside Corporation and three other gas firms last month under the Government's Gas Acceleration Program (GAP), which was established to help develop and secure domestic gas supplies.

But a government grants specialist says under the grant agreement there is nothing stopping the company sending the gas it taps overseas.

Company is 'favoured son' to China's Communist Party

Westside is part of the Chinese-owned Landbridge Group, which also has the controversial 99-year lease on Darwin Port, a deal that angered the Obama administration when it was struck in 2015.

Landbridge's founder and chairman is Chinese billionaire Ye Cheng, who is a member of China's People's Political Consultative Conference (CPPCC).

Got a confidential news tip? Email ABC Investigations at investigations@abc.net.au For more sensitive information: Text message using the Signal phone app +61 436 369 072 No system is 100 per cent secure, but the Signal app uses end-to-end encryption and can protect your identity. Please read the terms and conditions.

At a 2015 Senate hearing, Landbridge director Mike Hughes denied that Mr Cheng was a member of the Communist Party.

President of Landbridge Group with China's President Xi Jinping in Australia in 2014. ( Supplied: Landbridge )

"He is a member of the CPPCC," Mr Hughes said.

"It is an advisory body to the parliament. I believe it has something over 2,000 delegates."

A Westside spokesman told the ABC: "Landbridge is a private Chinese company and is not state-owned."

But the executive director of the Australian Strategic Policy Institute (ASPI), Peter Jennings, claims Landbridge is close to the ruling party in Beijing.

"You have to work on the basis that Landbridge is really acting as an arm of the Chinese Government when it makes its big foreign investment decisions overseas," he said.

Mr Jennings said Landbridge gets access to concessional loans from Chinese banks "because it is a favoured son of the Chinese political system".

"There is reach back to the Chinese Communist Party and to the Chinese intelligence apparatus, and that's something that we should be concerned about," he said.

"[This] should have led to some closer due diligence on the part of the Australian authorities in assessing whether or not this was an appropriate company to provide that $6 million incentive."

But Federal Resources Minister Matt Canavan told the ABC that the project assessment process confirmed the company was eligible.

"The grant was awarded to Westside as the applicant business incorporated in Australia, in accordance with the published guidelines," Senator Canavan said

(L-R) Current Energy Minister Josh Frydenberg, Ye Cheng and Andrew Robb in 2015, while Mr Robb was still Trade Minister. ( Twitter: @AndrewRobbAO )

Immediately after leaving Parliament in 2016, former Australian trade minister Andrew Robb went to work for Landbridge on an $880,000 salary as a "high-level economic consultant".

Last year, Fairfax obtained a letter outlining Mr Robb's consultancy agreement.

It revealed that as well as Landbridge, Mr Robb would also be engaged by Westside as a consultant.

Westside sells gas for Asian exports

The $6 million in federal money granted to Westside is to fast-track the drilling of 10 gas wells at the company's Greater Meridian Fields in Queensland's Bowen Basin, bringing forward the already planned wells by one year to 2020.

ASX-listed companies Armour Energy and Beach Energy, and US-owned venture Tri-Star Fairfields were also awarded $6 million each to develop new wells.

When the Government awarded the grants last month under its Gas Acceleration Program it said the money would be part of a push to "accelerate the development of onshore Australian gas resources to improve supplies to domestic gas consumers".

But Landbridge's Chinese website said "at present, natural gas produced by Westside Corporation Limited is ultimately shipped to South East Asia predominantly".

"Westside Corporation Limited is actively looking for additional oil and gas assets to provide additional opportunities for the [Landbridge] Group to input resources into the Chinese market," the website states.

However, Landbridge's Australian website states that it supplies both the domestic and international markets.

"None of the gas from these 10 wells will be supplied to international markets," a Westside spokesman said.

"Westside will be signing a formal agreement with the Government over the coming weeks. The drilling of these wells will commence later this year."

The Resources Minister said that gas produced under the GAP grant would be channelled into the domestic market.

"The application was clear that the supply was for the target market, being the east coast domestic gas market," Senator Canavan said.

Westside has a 20-year binding gas sales agreement to provide up to 65 Terajoules a day from its Meridian fields to the Gladstone Liquified Natural Gas (GLNG) project.

"Currently 100 per cent of Westside's gas is sold to GLNG, in a contract that was signed in 2014," the Westside spokesman said.

"Whether it is then exported is a matter for GLNG and over which Westside has no control."

Gas could be sent offshore: Cusack

The federal grant's guidelines and agreement state the purpose of the funding is to bring new gas flow to domestic gas consumers.

Former trade minister Andrew Robb is employed as senior consultant with the Landbridge Group. ( ABC News )

But Ben Cusack from government grants consultancy Bulletpoint has studied the Commonwealth's grant agreement and believes there is nothing to stop Westside from selling the gas sourced from the new wells to international markets.

"The contractual terms of a grant agreement mean that they need to spend money on eligible capital equipment," he said.

"In theory Westside could develop the gas processing facilities and send the gas offshore."

Senator Canavan said details on where the gas flowed were not included in the sample application provided.

"However these requirements are negotiated and written in to the grant agreement," he said.

The principal analyst with energy consultancy Wood Mackenzie, Saul Kavonic, said the GLNG project that Westside currently supplies was largely export driven.

"GLNG is one of Australia's recently built LNG export projects and most of the LNG that is produced during that project is sold to Kogas, which is a South Korean company, and Petronas, a Malaysian company," Mr Kavonic said.

Even if the extra gas produced by Westside was put into the domestic market, he said, it would make little difference.

"An extra eight to 10 wells being drilled in the Meridian project is going to have an immaterial impact on overall gas pricing and supply and demand dynamics," he said.

"We are talking about well under 1 per cent of overall domestic gas demand."

Mr Jennings said a large and connected Chinese company like Landbridge did not need Australian taxpayers to fund its gas developments.

"I think we should be looking closer at this and in particular how necessary is it to spend that money … with a company which has up to this point been wholly focussed on the export of gas to the South East Asian market and to opening up a market in China," he said.

Other grantees promising domestic gas delivery

ASX-listed Armour Energy said the $6 million GAP grant awarded to the company "is very helpful" for its Kincora project in Queensland's Surat Basin.

Armour said it was delivering 9 terajoules of gas into the east coast market every day, with the three wells funded under the GAP grant to more than double that output.

Adelaide-based Beach Energy told the ABC it only supplied gas to the domestic market.

US-owned Tri-Star said it was currently in talks with domestic users to take the gas produced from the wells funded by the grant.