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Australia's Minister for Resources Martin Ferguson announced a preliminary agreement between Korea Gas Corp. (036460.SE) and Chevron Corp. (CVX) for the delivery of liquefied natural gas, a deal he described as "potentially the largest long-term LNG contract between Australia and South Korea."

According to the press release from the minister's office Tuesday, the pact involves the delivery of 1.5 million metric tons a year of LNG to Kogas from the Gorgon Project in Western Australia state for a period of 15 years and the two parties have an option to extend the deal for another five years.

Chevron and Kogas couldn't immediately be reached for comment.

"We look forward to the successful conclusion of a Sales & Purchase Agreement," Ferguson said.

South Korea is the world's second-largest importer of LNG and Kogas is the world's biggest single buyer of the fuel.

The agreement comes a day after Chevron said the Gorgon LNG project in Western Australia will cost A$43 billion. Chevron, which owns a 50% stake in the project, said Monday that works will begin immediately and that it and its partners, Exxon Mobil Corp. (XOM) and Royal Dutch Shell PLC (RDSB.LN), with a 25% holding each, are still aiming to ship first gas by 2014.

Chevron last week said it signed three binding sales agreements to supply nearly 3 million metric tons a year of LNG from Gorgon to Japanese and South Korean energy companies.

Subject to Australian foreign investment approval, the Japanese companies, Osaka Gas and Tokyo Gas, will also acquire 1.25% and 1% interests in the project respectively.

Exxon Mobil last month struck two deals over Gorgon LNG, including a 20-year deal with PetroChina Co., the listed unit of China National Petroleum Corp., and a 20-year agreement with Petronet LNG Ltd., India's largest LNG importer.

Shell last year agreed to sell LNG from its share of Gorgon to PetroChina.

-By Sydney Bureau, Dow Jones Newswires; (612) 8272 4680.