The first phase of the A$10 billion ($6.4 billion) Surat Gas Project would bring as much as 90 billion cubic feet per year of new natural gas to market at peak production, Shell said in a statement.
The project is being developed by a Shell and PetroChina joint venture called Arrow Energy. Construction will start this year and its first gas sales are expected in 2021.
The investment is a timely injection of cash for Australia's A$2 trillion economy now on the verge of its first recession in three decades as businesses shut to fight the new coronavirus, throwing tens of thousands out of work.
Authorities are also eager to see the Surat project start up as Australia's southeastern states face gas shortages by the mid-2020s.
Queensland Premier Annastacia Palaszczuk welcomed the decision, saying the biggest gas project the state has seen since 2011 would be a shot in the arm for its economy.
"The first phase will mean 200 jobs and we should see people out in the field around August, September this year," said Palaszczuk, who is facing an election within months.
Queensland, which is also home to the controversial proposed Adani coal project, is heavily dependent on revenue from the mining and energy sectors.
