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tate-owned oil and gas giant PT Pertamina has secured additional supplies of liquefied natural gas (LNG) from a subsidiary of Italian oil and gas firm Eni, which operates an oil block off East Kalimantan.

Pertamina signed the deal worth US$4.4 billion on Tuesday with Eni Muara Bakau BV on the supply of 1.4 million tons per year of LNG beginning 2017 until 2024. The volume will be equal to 150 cargoes for the seven-year period.

The LNG will be produced from two fields located in the Muara Bakau production sharing contract (PSC) area, namely Jangkrik field and North East Jangkrik field.

'€œWe will deliver the LNG from Eni to the mining industry in East Kalimantan through a pipeline. In case not enough industry buyers to absorb the volume, we will export it,'€ said Pertamina president director Dwi Soetjipto.

Indonesia, which is estimated to have a significant amount of gas resources, is a major exporter of LNG. Most of the gas production is exported because of a lack of pipeline facilities to sell the resource in the domestic market.

Currently, the government is trying to boost domestic gas absorption so that the country can reduce its dependency on oil to fuel its economy.

However, the objective of higher domestic consumption is frequently hampered by poor infrastructure facilities that are crucial to support gas delivery to local buyers.

Thus, a number of commitments for domestic absorption and deliveries could not be met in recent years, leading the government to either sell the excess cargoes to the spot market or curtail gas output.

Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) deputy head Zikrullah said Pertamina would need to seek approval from the government if it wanted to export part of the gas supplies from Jangkrik and North East Jangkrik.

'€œHowever, we are expecting that within two years, better domestic infrastructure will be available so that domestic gas absorption will be higher,'€ Zikrullah said.

Muara Bakau PSC, which is located in the eastern part of the Kutai Basin in East Kalimantan, is currently operated by Eni, which holds a 55 percent stake in the block. Other shareholders are GDF Suez and Saka Energy. The two fields have a total capacity to produce 3 million tons per annum of LNG.

The gas from the Jangkrik and North East Jangkrik fields will be supplied to the Bontang LNG plant in East Kalimantan before being sold to Pertamina'€™s customers.

Apart from Pertamina, the buyer of gas from the two fields is fertilizer firm Pupuk Kaltim. Thus, domestic buyers would have already absorbed more than 50 percent of LNG produced once the fields commenced operation, according to Zikrullah.

'€œContractors of the gas fields are currently looking to seal more deals with other domestic buyers,'€ he added.

Beside a deal with Eni, Pertamina also signed on Tuesday a master sales and purchase agreement with PT Donggi Senoro LNG (DSLNG). The deal will cover the purchase of the first LNG cargo produced by the DSLNG plant in Sulawesi.

The LNG cargo from DSLNG will be shipped to the Arun regasification and receiving terminal in Lhokseumawe, Aceh. After completing a process at the terminal, Pertamina will distribute the gas around North Sumatra. The estimated delivery time is between the end of July to early August, according to DSLNG president director Gusrizal.