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tate-owned oil and gas giant PT Pertamina is expected to produce less liquefied natural gas (LNG) next year.

Pertamina director for gas Hari Karyuliarto said that the company estimated its LNG production in Bontang, East Kalimantan, and Arun in Aceh, would decline by 17 percent to 172 cargoes next year from 208 cargoes this year.

'€œThis is due to declining production,'€ Hari said on Monday.

Out of the total number, the LNG plants in Bontang are expected to produce 158 cargoes next year, down from the 189 cargoes expected this year. Meanwhile, the Arun plant will produce only 14 cargoes in 2014, down from this year'€™s 19 cargoes.

Each cargo measures about 125,000 cubic-meters.

Out of the total cargoes, only 22 would be delivered to domestic markets as Pertamina had long-term export commitments with foreign buyers, particularly those from Japan, South Korea and Taiwan, Hari said.

'€œMost LNG contracts will last until 2017. There will be some [contracts] extensions up to 2020,'€ he added.

Currently, Pertamina runs the LNG business through PT Badak NGL in Bontang and PT Arun NGL in Arun. According to Pertamina'€™s website, Arun has six LNG trains with a production capacity of 12.5 million tons per year while Badak in Bontang has eight trains with 22.5 million tons per year in total capacity.

The country is facing growing gas demand, particularly due to the use of gas in industrial activities, especially gas-powered power plants.

Due to the expected decline in gas production in its domestic fields, Pertamina has turned to overseas producers to meet the demand rise. Earlier this month, the company signed a deal with Houston-based energy firm Cheniere Energy Inc. in which Cheniere agreed to supply 0.8 million tons LNG per year for 20 years starting in 2018 to Pertamina'€™s terminals, including a LNG storage and regasification unit in Arun and a floating storage and regasification unit (FSRU) in Central Java.

The Arun storage and regasification facilities as well as Central Java FSRU rare currently under development.

In November, Pertamina kicked off the construction of the Arun LNG storage and regasification terminal project, which will have a total capacity of 400 million standard cubic feet per day (mmscfd), or equal to 3 million tons per year.

The project, which costs roughly US$80 million, is expected to be completed by 2014.