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(Corrects to show Freeport export capacity stake 4.4 not 3mtpa, paragraph 3)
* BP likely to supply volumes from U.S. -source
* Deal to have hybrid-price structure -source
* China already has gas deals with BG, Gazprom
MOSCOW/MILAN, June 17 (Reuters) - BP will sign a dealworth around $20 billion on Tuesday to supply China NationalOffshore Oil Corporation (CNOOC) with liquefied natural gas(LNG), Chief Executive Bob Dudley said at a conference inMoscow.
"It is a 20-year supply agreement on LNG. It is a fair pricefor them and a fair price for us. It is a good bridge betweenthe UK and China in terms of trade," Dudley said.
BP will likely source much of the LNG from its U.S. exportplant at Freeport, Texas, where it owns 4.4 million tonnes peryear (mtpa) of export capacity, having started negotiations withCNOOC earlier this year.
The deal, expected to boost China's LNG intake by at least1.5 million tonnes per year, or about 26 cargoes, cementsChina's role as a key buyer of U.S. gas, industry sources said.
China has emerged as one of the biggest beneficiaries ofcheap U.S. natural gas that in the coming years will be piped toGulf Coast plants and liquefied for shipment abroad in tankers.
Last year CNOOC signed an LNG supply deal with Britain's BGGroup that will deliver cargoes from U.S. and Australianexport plants under a dual-pricing scheme, reflecting cheap U.S.gas as well as a more expensive link to crude oil prices.
Its latest deal with BP will have a similar pricingstructure, following sustained efforts by China's NationalDevelopment and Reform Commission to cap a surging fuel importbill.
"After missing out on a deal to sell LNG to Taiwan lastyear, BP has now found a Chinese buyer for its Freeport volumes,which in pricing terms will have elements of U.S. as well as oilpricing," an industry source said.
Last month China locked in a 30-year piped gas supply dealwith Russia's Gazprom worth around $400 billion.
BP already ships cut-price LNG to CNOOC from its Indonesianexport plants under an agreement signed years ago.
China's ability to command lower prices comes at a time whenthe world's two biggest LNG buyers, Japan and South Korea, arebeing hit hard by high import costs, perhaps underscoringChina's status as a market which no producer can afford to miss.
Energy demand in Japan and South Korea is not expected tolog nearly the same growth rates as China, especially asauthorities re-orient towards a more gas-based economy.
BP currently has access to LNG produced in Trinidad, Angola,Egypt and Indonesia, with two new export facilities due to comeon stream in Australia in coming years.
The United States is producing record amounts of natural gasthanks to a drilling boom, and more than a dozen export projectshave been proposed, including Freeport, where exports are due tostart in early 2018.
Long-term supply deals lasting 20-years or more are becomingincreasingly rare as buyers hold out hope that a tide of newsupply from 2018 will help bring down prices.
(Reporting by Vladimir Soldatkin in Moscow, Oleg Vukmanovic inMilan and Nina Chestney in London; editing by Jason Neely)
