Under the heads of agreement, Tokyo Gas will buy 1.2 million tonnes of LNG per annum for 20 years from 2015 from QCLNG and from BG's global LNG portfolio.

The Japanese utility will also take up a 1.25% stake in the reserves and resources of some of BG subsidiary QGC's tenements in the Walloons Fairway of the Surat Basin as well as a 2.5% interest in the second train at QCLNG.

The two companies plan to complete negotiations and execute final agreements by the end of 2010. This is conditional on BG making a final investment decision on QCLNG, which is expected later this year.

"Tokyo Gas will become one of our important foundation customers for Queensland Curtis LNG, as we progress rapidly towards project sanction later this year," BG chairman Frank Chapman said.

Queensland Premier Anna Bligh said the deal opened up the Japanese market for LNG using coal seam gas as feedstock.

"What we are witnessing is the birth of an industry that will secure the prosperity of Queensland for decades to come," she said.

The premier also reiterated the CSG-LNG industry could create 18,000 jobs and bring growth to the Surat Basin and Gladstone despite the fact that none of the four major projects have committed to proceed with their projects.

The agreement comes just a week after BG signed a contract with China National Offshore Oil Corporation (CNOOC) for the supply of 3.6MMtpa of LNG from QCLNG.