A LONG-term gas supply contract is set to guarantee more than 1,000 jobs in the region's chemical industry.

Huntsman Petrochemicals and BOC have entered into the long-term deal for the supply of hydrogen and steam to Huntsman's manufacturing operations on Teesside.

BOC will invest around £30m to construct a new 32,000 tonne a year hydrogen plant at the Huntsman's North Tees site near Seal Sands.

Around 100 jobs will be created during construction and the contract should secure the future for the 1,200 Huntsman employees working at North Tees and Wilton.

David Parkin, Huntsman vice-president of purchasing and transportation, said: "A secure and competitive supply of utilities such as hydrogen and steam is essential to our existing facilities on Teesside, to our expansion plans and to our efforts to attract new investment to Teesside."

The new plant will be the largest out-sourced hydrogen plant in the UK, supplying high purity hydrogen by pipeline to Huntsman production facilities at both Wilton and North Tees, as well as steam to North Tees under a 15 year supply contract.

The project also involves the building of essential new infrastructures such as pipelines and power supply cabling.

Peter Huntsman, president of Huntsman Corporation said: "This initiative is another key step forward in our efforts to revitalise the chemical industry on Teesside.

"We are actively seeking political and economic development support to help us realise our ambitious plans."

Management at BOC expressed its delight to have won the contract which will allow it to extend and strengthen its supply capabilities for its customers in Teesside.

American petrochemicals group Huntsman expanded into Teesside last year in a £1.7 bn deal with chemical giant ICI.

ICI agreed to sell four of its businesses to Huntsman in the deal as part of ICI's efforts to get away from traditional bulk products and into speciality chemicals and paints.