UPDATE 2-ExxonMobil says near deal on potential LNG sales

* Exxon says near sales deal with 3 major LNG buyers in Asia

* Potential sales to Asian buyers are for a total 4.3 mtpa

* PNG LNG project on track to fully contract proposed output

* Japan's TEPCO in discussions to buy long-term LNG - report (Adds TEPCO in 5th para)

By Fayen Wong

PERTH, June 22 (Reuters) - ExxonMobil (XOM.N), operator of a liquefied natural gas project in Papua New Guinea, is nearing agreement on sales with three major buyers in Asia, putting the project on track for a final investment decision later this year.

The sale of 4.3 million tonnes per annum (mtpa), plus an earlier 2 mtpa deal, would mean the project was fully contracted for its proposed total output, cementing its frontrunner status among a dozen competing LNG hopefuls in the region.

ExxonMobil said on Monday its subsidiary Esso Highland Ltd, has "reached alignment on commercial terms" with three major LNG customers in Asia for long-term LNG sales.

"Exclusive discussions will commence with these customers to finalise binding sales and purchase agreements to establish the project's foundation customers," Exxon said in a statement.

Japan's Nikkei business daily reported that Asia's biggest utility, Tokyo Electric Power Co (TEPCO) (9501.T), would buy close to 2 mtpa of LNG from the project. TEPCO acknowledged it was in talks, but declined to comment on the details.

In a sales agreement announced in April for 2 mtpa, the customer is awaiting approval from its government on the key commercial terms, Exxon said.

For a factbox on a list of proposed LNG projects in the Asia-Pacific region, click on [ID:nSYD475128]

Energy firms have said that, despite the recent global financial crisis, interest among Asian buyers to secure long-term LNG supplies has remained firm.

Exxon holds a 41.5 percent stake in the PNG project, while Australian-listed Oil Search Ltd (OSH.AX) has 34 percent and Santos Ltd (STO.AX) owns 17.7 percent. Nippon Oil (5001.T) and PNG landowners own the rest.

Shares in Oil Search were up 2.2 percent to A$5.64 in early trade, while Santos shares rose 0.1 percent to A$14.90 in a broader market up 0.6 percent .AXJO.

The project, also known as PNG LNG, is estimated to cost between $10-$11 billion and is targeting first LNG delivery in late 2013 or early 2014. (Additional reporting by Osamu Tsukimori in Tokyo; Editing by Michael Urquhart)