China's Sinopec clinched the second-largest single Chinese liquefied natural gas deal, and ventured for the first time into a foreign unconventional gas asset to feed a domestic boom for the clean fuel.

Sinopec Group, parent of Sinopec Corp , signed a preliminary deal for 20 years of LNG supplies with Australia Pacific LNG Pty Ltd (APLNG), and will acquire a 15 percent stake in the giant coal seam project owned by U.S. energy firm ConocoPhillips and Australia's Origin Energy .

Sinopec agreed to buy 4.3 million tonnes of LNG per year starting 2015 from the project in the eastern Queensland state, companies said, a significant step to clear the way for a final investment decision for the $35 billion project.

The deal will help Sinopec diversify gas supply sources to meet Chinese demand for natural gas, said Sinopec's General Manager Su Shulin in a statement.

China, seeing gas as the most efficient way to cut carbon emissions, aims to triple consumption by 2020 to supply 10 percent of its total energy use from 4 percent now, curbing the use of dirtier burning coal.

And nearly a third of that demand will be met by imports of LNG and piped gas from Central Asia, Myanmar and potentially Russia. Energy consultancy Wood Mackenzie has forecast China's LNG imports to rise five fold to 46 million tonnes by 2020.

The 86 million tonnes volume covered by the Sinopec pact was only second to China's first LNG import deal sealed in 2002 when China National Offshore Oil Corp (CNOOC) secured 3.7 million tpy of gas from Australia's Northwest Shelf project for 25 years.

If the deal is finalised, share holdings of Conoco and Origin will be reduced to 42.5 percent each, the companies said on Friday.

BIG LEAGUE

It's particularly significant because it catapults Sinopec into the big leagues in China. They have been the also-ran behind PetroChina and CNOOC, said Tony Regan, an analyst at Tri-Zen Capital in Singapore.

CNOOC, parent of CNOOC Ltd , is the leading Chinese LNG developer with three receiving terminals in operation and another two under construction, while PetroChina's two terminals were scheduled to begin operation from April.

Sinopec is building its first terminal in eastern Shandong, which will be fed from ExxonMobil's Papua New Guinea LNG project.

The latest deal would enable Sinopec to accelerate work at the proposed 17 billion yuan ($2.58 billion) terminal in the southern coastal city of Beihai in the Guangxi region expected to open in 2014.

Sinopec will supply the Australian gas to the Beihai terminal, which in January won initial government approval from the National Energy Administration, an industry source with direct knowledge of the project told Reuters.

The terminal will have an initial capacity of 3 million tonnes per year, expandable to 5 million tpy by around 2015, said the source.

Australia Pacific LNG, a 50-50 joint venture between Origin and Conoco, will have initial capacity of 4.5 million tonnes per annum (mtpa) of LNG, eventually ramping up to 18 mtpa and is expected to come online at the end of 2015.

This clearly increases confidence that the project will proceed, so we expect now to intensify the dialogue we are having for other customers for the project, Grant King, managing director of Origin Energy, told reporters on Friday.

Earlier this week, the Australian government gave the environmental clearance for the $35 billion coal seam gas project in eastern Queensland state.

They are in a much better position, that's for sure ... it will pretty well underwrite train one, said Di Brookman, an analyst with CLSA in Sydney.

Origin's shares were up 5.78 percent at A$16.83 BY 0635 GMT.

($1=6.578 Yuan)