Shares in Santos closed 1.6 per cent higher after the company said oil production started ahead of schedule at its $490 million Fletcher Finucane project off the West Australian coast.

Santos expects to produce 15,000 barrels daily in the first year of production.

The company recently said the Fletcher Finucane oil project in the Carnarvon Basin would be commissioned later this month, 16 months after being approved.

Santos has a 44 per cent stake in the project, with Kufpec and JX Nippon Oil and Gas holding the balance.

Shares in Santos closed 21 cents, or 1.6 per cent, higher at $13.14.