The proposed US$15 billion PNG LNG liquefied natural gas project in Papua New Guinea has finalized a gas sales agreement with Japan's Osaka Gas Co. Ltd. (9532.TO), project operator Exxon Mobil (XOM) said Tuesday.

The agreement is for the supply of about 1.5 million metric tons of LNG a year from the project for 20 years, Exxon Mobil said in a statement.

The U.S. oil company and the other PNG LNG partners including Oil Search Ltd. (OSH.AU) and Santos Ltd. (STO.AU) on Dec. 8 sanctioned the project, conditional on it finalizing funding, and clinching binding sales agreements with Osaka Gas and Taiwan's state-owned refiner CPC Corp. (CPC.YY).

Oil Search said in a statement Tuesday that the final agreement, with CPC Corp., is expected to be finalized in "early 2010", underwriting the project's full 6.6 million metric ton per annum capacity.

The project has also finalized deals for 2 million tons of LNG annually with China Petroleum & Chemical Corp. (SNP) and 1.8 million tons of LNG a year with Tokyo Electric Power Co. (9501.TO), or Tepco.

The project on Dec. 16 secured financing documents for up to US$14 billion of commitments from lenders, with financial close expected mid-February.

-By Ross Kelly, Dow Jones Newswires; 61-2-8235-2957; ross.kelly@dowjones.com
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