* China demand seen surging more than 40 pct this year-analyst
* Potential 3-year deal under discussion -sources
* PNG LNG looking to firm up last mid-term supply of 0.45mtpa
* 'Everyone worried about winter shortage' -China LNG buyer(Adds details and background)
By Jessica Jaganathan
SINGAPORE, Oct 19 (Reuters) - Unipec Asia, the trading armof Chinese oil major Sinopec , is in talks tobuy more liquefied natural gas (LNG) from the Exxon MobilCorp-operated Papua New Guinea (PNG) project, fiveindustry sources told Reuters.
If agree, a supply deal would likely start ahead of anexpected surge in China's demand this winter and it will be forabout three years, two of the sources briefed on the mattersaid. They spoke on condition of anonymity as they were notauthorised to speak with media.
The exact volumes under discussion were not immediatelyclear but project holder Oil Search said in itshalf-yearly results statement in August that negotiations areongoing to contract the project's final batch of mid-term supplytotalling 0.45 million tonnes per annum (mmtpa).
Exxon's existing LNG deal with Unipec from the PNG project,signed in 2009, is to supply about 2 mmtpa for 20 years.
The overall PNG project has a total contracted volume of 7.5mmtpa so far, according to Oil Search. The project has signedmid-term LNG sale and purchase agreements with PetroChina andoil major BP, and has sold 6.6 mmtpa under long-termcontracts to Japanese trading giant JERA, Osaka Gas,Sinopec and Taiwan's CPC Corp.
It wasn't immediately clear whether Exxon is also currentlyin talks with other potential buyers of Papua New Guinea LNG.Exxon holds a 33.2 percent stake in PNG LNG, while Oil Searchhas a 29 percent interest. Two PNG government-linked entitiesand Australia's Santos Ltd hold smaller stakes.
An Exxon spokeswoman in Papua New Guinea declined tocomment, saying the company does not comment on commercialmatters. A Sinopec spokesman did not comment.
"Everyone is worried about a winter shortage," said onemajor LNG buyer in China, adding this is driving Chinesecompanies to lock in supply ahead of winter when demandtypically surges.
For example, China's Petrochina International inked athree-year agreement with the PNG LNG project in July for thesupply of 0.45 million tonnes of LNG a year. It also signed a22-year deal with Qatargas in September for 3.4 million tonnesof LNG a year.
China, the world's second-largest LNG importer, is expectedto import a record 54 million tonnes of the fuel this year,surging more than 40 percent from 38 million tonnes last year,according to consultancy SIA Energy earlier this week.
Last winter, an over-ambitious attempt to convert millionsof Chinese households from coal to gas heating driven by agasification push by the government, left many villages withoutgas supplies amid freezing temperatures.(Reporting by Jessica JaganathanEditing by Kenneth Maxwell)
BP (BP.)