Australian energy firm Santos Ltd (ASX:STO) has flagged a $500 million to $1 billion equity raising to fund its Gladstone LNG project after signing a deal with state-run Korea Gas Corp (KOGAS).

The gas giant on Friday said it had sold a 7.5 per cent stake in GLNG to Korean Gas Corp (KOGAS) and another 7.5 per cent to France's Total for a combined $665 million.

KOGAS will also buy 3.5 million tonnes of liquefied natural gas (LNG) per year from Gladstone for 20 years starting in 2015.

Korea's government said on Thursday that KOGAS will buy a 15 percent stake in Gladstone in a deal to be signed on Friday

Korea Gas will buy 7.5 per cent from the project's operator, Santos, and another 7.5 per cent from Malaysia's Petronas.

The deal would be a key step for Santos to make a final investment decision next week in the 7.2 million tonne-per-year, $15 billion project, which will be among the first to utilise Queensland's massive coal seam gas reserves.

"The stars have really aligned for GLNG in recent weeks and today's agreements with KOGAS and Total mean that we can make the final investment decision (FID) in January," Santos chief executive David Knox said.

Upon completion of the deals, Santos will retain a 30 per cent stake in GLNG, with Petronas having 27.5 per cent, Total 27.5 per cent, and KOGAS 15 per cent.

Santos went into a trading halt as the equity raising is completed using Morgan Stanley and JP Morgan. Shares last traded at $12.97.