ChatGPT maker OpenAI and an Australian data centre operator have agreed to develop a multibillion-dollar AI centre in Sydney.

Brisbane-headquartered NextDC said on Friday it signed a memorandum of understanding with OpenAI to develop an artificial intelligence campus and a “supercluster” of graphics processing units.

The two firms will collaborate on planning, development and operation of the AI infrastructure partnership in western Sydney, NextDC said in a statement.

NextDC shares were up 4.1 per cent in early afternoon trade.

Australia’s government said the Aus$7 billion (US$4.6bn) development would create thousands of direct and indirect jobs during its construction, and ongoing technical, manufacturing, engineering and operational roles.

The project would use long-term power purchase agreements for new renewable energy sources and “next generation” features not requiring drinking water for cooling, the government said.

“It’s more proof Australia has the talent, clean energy potential, trade partnerships, and policy settings needed to be one of the big winners when it comes to AI,” said Treasurer Jim Chalmers.

“Partnerships like these will help create good jobs, boost skills, and spread AI adoption across our economy.”