Indonesia’s Pertamina said it has struck an initial agreement with Bumi Sarana Migas, an oil and gas firm linked to Vice President Jusuf Kalla, to build the nation’s second land-based liquefied natural gas (LNG) receiving terminal.

Indonesia is the second-largest LNG producer in Asia, but also one of the world’s top five LNG exporters.

However, with domestic gas production slipping and local demand growing in Southeast Asia’s largest economy, Indonesia has begun consuming more of its own production and seeking overseas supplies.

Construction of the 4 million-tonne-per-year (MTPA) Bojonegara Receiving Terminal in Banten should be complete by 2019, Pertamina CEO Dwi Soetjipto said in a statement. It was not immediately clear when the construction of the terminal was expected to commence.

"Infrastructure is the main requirement in utilising gas fuel, because once infrastructure is installed demand will be created," Soetjipto said, noting that a power plant was expected to be built afterward using gas from the terminal to feed into the western Java grid.

Bumi Sarana director Solihin Jusuf Kalla said he hoped Bumi Sarana, a unit of the Kalla Group, could complete the project within the targeted three-year time frame.