Temasek-backed Pavilion Energy has taken another step in its plans to develop small-scale liquefied natural gas (LNG) solutions in the region.

The group on Thursday morning signed a memorandum of understanding (MOU) with Indonesian state-owned energy firm Pertamina to work towards exploring opportunities in regional small-scale LNG projects, joint marketing, trading, procurement and investments.

"This MOU supports the parties' interests in developing energy solutions in the region, and fosters closer collaboration between the two parties," said a Pavilion Energy spokesman.

The agreement comes a year after Pavilion Energy said that it plans to start providing small-scale LNG solutions in South-east Asia.

Such solutions are widely expected to gain in popularity as it would make available natural gas for users not connected to pipeline networks, and also lower the barriers of entry for LNG suppliers.

Industry players have said that Indonesia, as a sprawling archipelago of 14,000 islands and with a population of about 250 million people, has the potential and ambition to become the most important small-scale LNG player in Asia.

The country, once the world's second-largest gas producer, is expected to start importing LNG by the end of the decade to meet soaring domestic demand for gas as it ramps up electricity production.

Its president Joko Widodo has committed to deliver 35,000 megawatts of electricity across Indonesia by the end of his term in 2019. State-run utility PLN is driving this project and plans to build 109 power plants. With many of them small in size, small-scale LNG is seen to be necessary.

Since its launch in 2013, Pavilion Energy, which is wholly owned by Temasek Holdings, has taken a stake in gas fields in Tanzania, secured LNG supply from the United States and also signed various portfolio LNG supply contracts. In January this year, it secured a licence to supply, starting early next year, LNG bunker to vessels in Singapore.