Korea Gas Corp., the world's biggest buyer of liquefied natural gas, agreed to buy the fuel from BP Plc's Tangguh project in Indonesia at $20 per million British thermal units.

Korea Gas will buy ``nearly'' 1 million metric tons of LNG a year, Eddy Purwanto, deputy of operations at Indonesia's oil and gas regulator BPMigas, said in Jakarta today. The cost is based on a Japan Crude Cocktail oil price of $120 a barrel. The price, calculated by Japan's Ministry of Finance, is the average cost of crude oil imports by the North Asian country.

The higher price may allow Indonesia, the world's third- largest LNG exporter, to boost revenue from gas as crude production from aging fields declines. BP may divert half of the 3.5 million metric tons a year of Tangguh LNG earmarked for Sempra Energy in Mexico to buyers willing to pay more, Energy Minister Purnomo Yusgiantoro said in May 2007.

``We're in talks with other buyers,'' including Tokyo Gas Co. Ltd. and Thailand's PTT Pcl, to buy the remaining gas that can be diverted, Purwanto said. ``We want to get similar prices'' to the one agreed by Korea Gas, he said.

Indonesia may get additional revenue of $19.7 billion from Tangguh if all the gas that can be diverted from Sempra fetches as much as Korea Gas is paying, BPMigas said in a statement. The average price of Tangguh LNG will rise to $8.21 per million BTU from $5.76 per million BTU before the diversion.

Tangguh Contracts

BP may start shipping the fuel to Korea Gas in 2010, Purwanto said. The companies haven't agreed on the duration of the contract, he said.

The Tangguh LNG project has contracts to supply 3.5 million metric tons a year to Sempra, 2.6 million tons a year to a terminal in China's Fujian province and a combined 1.1 million tons a year to South Korea's K-Power and Posco. China agreed in January to pay 31 percent more for the fuel than contracted in 2006.

Tangguh will initially have two units, or trains, with a total capacity of 7.6 million metric tons a year. BP owns 37 percent of the $5 billion project, making it the biggest single investor, while Cnooc Ltd. holds about 14 percent.

LNG is natural gas chilled to liquid form for transportation by tanker to destinations not connected by pipeline. It is turned back into gas for delivery to users such as power plants.