Australia-Pacific LNG, a Aus$35 billion joint project by Origin Energy and US firm ConocoPhillips, will supply the Chinese petrochemical giant with 4.3 million tonnes of LNG per year for 20 years from 2015 under the deal.

Sinopec will also spend US$1.5 billion for a 15 percent stake in the joint venture in Queensland state, the largest project currently planned in Australia using pioneering coal seam technology to cool and liquefy underground gases.

The move comes as China, the world's biggest energy consumer, tries to diversify and move away from its reliance on coal and crude oil while also struggling to take control of its pollution problem.

Conoco executive Ryan Lance said the nuclear crisis in Japan had also boosted interest in LNG, which is considered easy to ship because of its liquid form and is cheap to transport from Australia compared with the Middle East.

"Since the tragic events in Japan gas is going to be in greater demand in the Asia Pacific region, and we're finding that with the customer interaction that we have today," Lance told reporters.

Resources Minister Martin Ferguson said it was "the biggest single LNG sales and purchase agreement by annual volume in Australia's history," and cemented the country's leading role in the burgeoning clean fuels market.

"Deals like this one put Australia on track to be one of the world's largest suppliers of LNG in coming years," Ferguson said.

"Australia will shortly become the second-largest exporter of LNG in the world," he added.

"Increasing our supply of LNG to China will also help reduce emissions and help ensure rising energy demands are met with cleaner fuel sources."

Ferguson said China was Australia's second-largest customer for LNG and the Sinopec deal brought new and existing contracts to more than 15 million tonnes annually.

Chinese demand for gas was forecast to jump 5.9 percent every year until 2035, compared with OECD growth of 0.5 percent, taking the Asian giant's share of global gas consumption from 2.7 percent in 2008 to 8.7 percent by 2035.

"Our proximity and history as a secure supplier means that Australia is well placed to meet the energy needs of our Asian neighbours, including China, in the decades ahead," said Ferguson.

The Origin-Conoco project, in Queensland's Surat Basin, had the potential to significantly expand the region's lucrative coal seam gas industry, he added, and "cement (its) place as a key LNG hub."

It is expected to create 6,000 construction jobs and another 1,000 once it is operational, with total gas projects expected to generate more than Aus$50 billion (US$53.8 billion) in investment and "hundreds of billions in exports", the minister said.

Conoco's Lance said talks were ongoing with a number of other buyers, believed to be Asian, with production at the facility ultimately expected to ramp up to 18 million tonnes per annum.

Sinopec vice president Zhang Yaocang said the Chinese firm also "continues looking for more cooperation opportunities in Australia" to meet the "rapidly increasing demand of customers in China."

Australia has already green-lighted two rival projects worth about $30 billion in the region -- one run by Britain's BG Group and a second tie-up between Australia's Santos, Malaysia's Petronas and France's Total called Gladstone LNG.

Korea's KOGAS bought into Gladstone in December, taking a 15 percent stake in the US$16 billion project. It and Petronas will be the venture's primary customers.

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