Sinopec (0386) and PetroChina (0857) may continue to see their profits eroded by surging crude oil prices after the National Development and Reform Co

China's CNOOC said it has sealed a gas sales contract with end users for the country's second liquefied natural gas (LNG) import terminal, which is set to start operation in southeastern China in early 2009.

City gas distributors in five cities and three power plants in Fujian province have agreed to buy a total of 2.6 million tonnes of super-cooled natural gas a year from CNOOC for 25 years, the Chinese oil firm said on its Web site, www.cnooc.com.cn.

The gas will come from Indonesia's giant Tanghuh field, operated by BP (BP.L: Quote, Profile , Research).

In June last year, China started its first LNG import project in southern China's Guangdong province, where surging demand for the clean fuel has outstripped supply and led China to buy additional cargoes from the international spot market.

China, the world's second-largest oil consumer and heavily reliant on coal, plans to build more LNG terminals along its east coast, aiming to boost gas use to 5.3 percent of its energy needs by 2010 from around 3 percent currently.

But rising global prices and a lagging, state-regulated domestic gas market have slowed the process of securing supplies.

China's demand for gas has been growing far faster than for oil in recent years, at double-digit percentage rates, driven by residential use in line with the country's rapid urbanisation and by consumption as fuel for factories.