China National Offshore Oil Corp, a leading offshore oilfield services provider in China, has announced that it has signed a Liquid Natural Gas agreement with BG Group Plc.

According to the agreement, CNOOC will purchase 3.6 million tons of LNG from BG each year for a total period of 20 years. In addition, the two parties will cooperate on the development of an LNG project in Australia.

Under the agreement, CNOOC will own a 5% stake of the coal bed gas storage and a 10% in the first production line in the Australian project. In addition, the two sides will set up a shipping company and build two ships for LGN transportation in China. CNOOC will own a 70%stake in the shipping company.

The agreement will take effect after being approved by the Chinese and British governments later this year.