BOC says it has secured a $1 billion long-term industrial gas supply contract with Perdaman Chemicals & Fertilisers for its proposed $US3 billion Collie urea plant.

Under the contract, BOC, a member of Germany's Linde Group, will supply nitrogen and oxygen over a 20-year period with an additional five-year option to the Perdaman project which will transform sub-bituminous coal into urea using clean coal gasification technology.

Two BOC air separation plants will produce about 4800 tonnes of oxygen a day and about 7000 tonnes of nitrogen per day, more than doubling the current Australian and New Zealand total supply of industrial air gases.

The Collie air separation units will take three years to complete and are expected to start construction in the third quarter of 2011 after Perdaman has secured project finance.

Perdaman Chemicals & Fertilisers managing director Vikas Rambal described the deal as another important milestone, as the company progressed towards construction phase.