Exploration & production company Genting Oil & Gas has given the green light to Chinese yard Wison (Nantong) Heavy Industry Co to start work on a 1.2 million tonne per annum floating LNG (FLNG) production unit for Indonesia.

Genting Oil & Gas, an arm of the Genting Group, said it has signed a limited notice to proceed agreement with Wison to spend over $43m on long lead items including the cold box, compressor, and generator sets for the planned floater.

These will be bought before an engineering, procurement, construction, installation & commissioning (EPCIC) contract is signed.

Wison is currently conducting a front-end engineering and design (FEED) study for the FLNG facility, which is estimated to be completed by end of November 2023.

Genting has set up PTLNG as the special purpose vehicle to construct, own and operate the FLNG unit, an onshore gas processing plant, and pipeline which will be located in West Papua, Indonesia.

The company has an agreement with Indonesia for the supply of 230 million cubic feet per day (mmcfd) of natural gas from the Kasuri Block in West Papua to the FLNG facility over an 18-year period, along with another for 101 mmcfd of natural gas over a 17-year period to an Ammonia and Urea plant to be built onshore in the region.

The company plans to start production of LNG in the first half of 2026.

Tan Kong Han, who is president, chief operating officer and executive director of Genting Berhad — the holding company of Genting Oil & Gas, explained that this will be Indonesia's first FLNG facility and the ninth unit worldwide.

Wison chairman Hua Bangsong, said: “According to the Gastech exhibition in Singapore that I attended, the LNG market is very tight at the moment, and it is expected that the future demand will increase significantly, so it is necessary to lock in key resources as soon as possible to ensure that the Project will be put into production on time.

Hua said Wison sees Indonesia as an important strategic market for FLNG.

This week Malaysia's Bumi Armada said it has signed a deal with a subsidiary of Indonesian energy company Pertamina and natural gas trading company PT Davenergy Mulia Perkasa for an LNG project Madura gasfield which would be developed using an FLNG unit.

Bumi and Pertamina will design, construct, install, and operate the FLNG unit and storage facility and supply an LNG carrier for the project.

Preliminary discussions have been initiated with potential off-taker clients and the first shipment of LNG is expected three years after making the final investment decision, Bumi Armada said.