BHP Billiton signs LNG supply deal for Escondida mine in Chile

SANTIAGO, May 29 (Reuters) - Global miner BHP Billiton (NYSE: BBL - news) has signed a liquefied natural gas (LNG) contract for its Escondida project in Chile, helping to secure the future energy supply of the world's largest copper mine.

Gas Natural Fenosa will supply LNG to the Mejillones terminal in northern Chile from 2016, when BHP's nearby Kelar power plant, currently under construction, is due to be ready.

"The electricity generated by the station will supply the growing demand from Escondida and BHP Billiton's other operations in the Atacama desert," said the company in a statement on Thursday.

Gas Natural (AMEX: EGAS - news) will source its LNG from its global portfolio, including from the U.S. plant Sabine Pass, also under construction, added BHP.

A squeeze on energy supply in Chile's arid north, where the bulk of the nation's copper mines is situated, has led mining companies to invest in their own plants in recent years. The government is encouraging the use of LNG to help alleviate the power crunch. (Reporting by Rosalba O'Brien; Editing by Bernadette Baum)