The State Gas Company (PGN) joins hands with the State Electricity Company (PLN) to develop a US$400 million's worth liquefied natural gas (LNG) terminal in East Java.

The development of LNG terminal with 250 million standard cubic feet per day (MMscfd) of gas is realized once the gas supply has been made certain.

President Director of PGN Sutikno revealed the plan was being finalized by the State Ministry for State Enterprises, which is the majority shareholder in the two state-owned enterprises.

According to Sutikno, the expensive land price in Gresik could force the company to shift the location to Tuban. Previously, PGN disclosed it would develop to terminal in Situbondo. However, following Pertamina's pipeline blast in Sidoarjo, PGN decided to relocate the terminal to Gresik.

The LNG terminal will be built to anticipate rising demands for gas from East Java in 2012-2013. The province is even predicted to suffer from gas deficit in the period.

East Java currently needs 450 MMscfd of gas. For a start, PGN will develop one LNG train with an annual capacity of 1.5 million tons or 200 MMscfd.