Singapore's Keppel Offshore & Marine and Pavilion Energy have signed an agreement with Indonesia's state-owned PT Perusahaan Listrik Negara (PLN) to explore opportunities in the development of small-scale liquefied natural gas (LNG) distribution in West Indonesia.

The signing took place at the Singapore-Indonesia Leaders' Retreat here yesterday. The agreement follows talks between the two governments over bilateral energy cooperation during the Leaders' Retreat in Semarang last year.

A joint feasibility study was carried out, which identified cost savings and the mutual benefits of collaborating in the small-scale LNG value chain.

Under the agreement, the three companies will tap their combined expertise to distribute LNG in remote areas in West Indonesia. LNG can be delivered to floating and onshore LNG terminals using small LNG carriers, where it is regasified and used to generate electricity at PLN's power plants.

Keppel O&M chief executive Chris Ong noted that Keppel has almost 30 years of LNG experience. "With a comprehensive suite of solutions for every stage of the gas value chain, including the world's first Floating Liquefaction Vessel conversion and the world's first Floating Storage and Regasification Unit conversion, we are able to provide cost-effective, end-to-end solutions for our customers."