Tullow Oil said it will sell a 20 per cent interest in the Namibia Production Licence 001, which contains the Kudu gas field, to Itochu Corporation.
To earn the interest, Itochu will pay 40 per cent of the cost of two appraisal wells at Kudu and further financial payments depending on the volume of reserves developed.
According to a report in the Nikkei business daily in Tokyo, the value of the transaction is worth around 10 billion yen.
Tullow said the two appraisal wells will be drilled to establish commercially productive flow rates from the Kudu East reservoir, and if this is achieved, it will show multi-trillion cubic feet of gas upside potential.
The semi-submersible rig, Pride South Seas, will arrive at the end of April and each well is expected to take around 80 days to drill.
Aidan Heavey, chief executive of Tullow said: 'We are delighted to welcome Itochu, a strong international partner, to work with Tullow in the appraisal and development of the Kudu gas field.'
Kudu has 1.3 trillion cubic feet of proven gas reserves, which will be used to fire a $1.1 billion power station at Oranjemund producing up to 800 megawatts of electricity.
Following the sale, Tullow's interest in the gas field will be reduced to 70 per cent, with the remaining 10 per cent held by Namcor, the Namibian petroleum parastatal.