Australian-owned Central Petroleum Limited has picked up a 50 per cent stake in the NT's Mereenie oil and gas field from international giant Santos.

Central Petroleum has advised the stock exchange that the agreement will give Santos $45 million in cash now, with another $35 million to be paid when the deal closes, and a balance of $10 million to be paid in June 2016.

The two companies say the 50/50 partnership will allow both to get the most for their money.

The field is located in the Amadeus Basin, about 300 kilometres west of Alice Springs.

Central Petroleum will add the new site to its existing oil and gas operations at the Dingo, Palm Valley and Surprise fields in central Australia.

Santos says the partnership will help it capitalise if the proposed Northern Territory to east coast gas pipeline (NEGI) is completed.

Central Petroleum's managing director Richard Cottee said the deal would significantly increase gas production in central Australia.

“Mereenie was a gas field with an oil rim and with the oil prices down and with the potential for east coast pipeline we will be concentrating on ensuring there will be sufficient gas for that pipeline,” Mr Cottee told ABC reporters.

“We've got a $10 million program that we're paying for in the next three to six months with the aim of getting those reserves up to 280 petajoules so they can supply at least 15 petajoules, or about 25 per cent, of the pipeline out of Mereenie alone.

“At the present time absolutely everything has been financially secured through a debt facility of up to $75 million.”

The companies’ prime objective will be to increase the gas flow at Mereenie, with Central Petroleum set to move into the role of operator of the field in coming months.

Central Petroleum has made a pledge to scale back its use of fly-in, fly-out workers, and increase the number of Indigenous employees at the Mereenie field.

“At our present operation we have about 30 per cent employment of Aboriginal people,” Mr Cottee said

“We are trying to insure that we move the focus back to Alice Springs and that the maximum economic benefit goes to Alice Springs.

“We want most of the supplies to come from Alice Springs as well, which means increased economic activity.”