Xinhua news agency said the deal was worth 8.5 billion dollars.

The two sides originally agreed the deal in 2002, with deliveries to begin in 2007, but after Wednesday's finalization, delivery will now begin in 2009, the reports said.

The accord will allow CNOOC to deliver LNG to power suppliers in five cities of southeast China's Fujian province beginning in 2009, the China Daily said.

"The deal is Indonesia's first long-term LNG supply project for China, which has far-reaching significance for both countries," said Eddy Purwanto, an official with BP MIGAS, a government body overseeing oil and gas production in Indonesia.

Energy security is becoming an urgent priority for fast-growing China, already the world's second-largest consumer of oil, and it is struggling to find new energy sources to keep up with demand.

Tangguh draws its natural gas supplies from six fields with proven reserves of 14.4 trillion cubic feet in the Bintuni area of Papua.

The deal comes after CNOOC reportedly wrapped up an agreement with Malaysia's Petronas that could set a pricing benchmark for natural gas in Asia.

China's largest offshore energy group concluded an accord with state-owned Petronas to supply LNG to a terminal in Shanghai, the Financial Times said Monday, citing chairman and chief executive of CNOOC Fu Chengyu.

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