Under the agreement, Indonesia will supply up to 2.6 million tons of LNG a year to the eastern China province from the Tangguh gas field in its eastern most province of Papua.

As part of the deal, BP, which operates the Tangguh field in partnership with Indonesia's state oil and gas company Pertamina, will sell a 12.5 percent Tangguh stake to China National Offshore Oil Corp (CNOOC), the country's largest offshore oil company, according to Zhang Jianning, vice-president, government & public affairs, BP China. BP had owned a 49.66 percent stake in the field.

The landmark signing was one of the positive results of the First Indonesia-China Energy Forum which opened in Bali on Wednesday.

Indonesia Energy and Mineral Resources Minister Purnomo Yusgiantoro termed the LNG deal as "the biggest project since the new order era," saying the Fujian contract will significantly help the Indonesian economy recover.

The Tangguh project, about 3,500 kilometers south of Fujian, is scheduled to start supplying the terminal in Meizhou Gulf, in which CNOOC holds a 60 percent stake, in 2007.

The Tangguh field was also a candidate for another lucrative deal to supply China's first LNG terminal in South China's Guangdong Province, but Australia's North West Shelf consortium beat stiff competition last month from the Southeast Asian country and Qatar to win the US$14 billion supply contract.

The deal, Australia's largest single export contract ever, mean it will supply 3 million tons of LNG a year for 25 years to Guangdong.

Analysts say China's two massive natural gas contracts have illustrated how the country is increasingly tying itself to foreign partners in a bid to diversify its energy resources.

(China Daily September 27, 2002)