The company said the National Executive Council authorized PNG Minister of Energy Nixon Duban to sign a gas agreement to develop the so-called Stanley gas condensate project in Western province.
The Stanley gas project involves the production of 140 million cubic feet of natural gas from two wells at the site. The PNG approval includes the development of pipelines associated with the field.
Horizon said the government's approval triggered the sale of 40 percent of its stake in the project to Japanese company Osaka Gas for $77 million.
Papua New Guinea ranks 49th in the world in terms of gas reserves with an estimated 5.4 trillion cubic feet.