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Indonesian state utility Perusahaan Listrik Negara (PLN) is in talks with Iran LNG Co (ILC) to import around 1.5 million tonnes a year of liquefied natural gas, PLN oil and gas division head Suryadi Mardjoeki said on Friday, Reuters reported.

He was confirming a report in the Kontan newspaper quoting Chief Executive Dahlan Iskan, who said that both companies have conducted assessments, but have yet to make a final decision on the purchase, Sharanet reported.

"PLN went to check the facility in Iran in late April, and is preparing an offer to the Iranian firm," Mardjoeki told Reuters. He said a decision could be taken by the end of the month.

When a deal is reached, the imports will last for 10-15 years starting from 2013, Dahlan said, as quoted by Kontan newspaper.

Analysts said Iran is unlikely to become a big exporter of natural gas unless China, a key partner as international sanctions scare others off, can develop technology to liquefy the country's gas reserves.

European Union bans last year on supplying energy equipment make it almost impossible for Tehran to get full-scale liquefaction technology from Germany's Siemens <//siegn.de><//siegn.de></><//><//siegn.de></><//></><//></><//>, with the only other process patented by U.S. industrial giant and military supplier GE already off limits under U.S. laws.

China's National Petroleum Corporation (CNPC) signed a deal in 2010 to develop the South Pars field, replacing France's Total , part of an international search by state-run Chinese companies for energy to fuel rapid economic growth.

PLN is looking into buying the 200 billion British thermal units a day of LNG from Iran at a price based on oil at $80 a barrel, Mardjoeki said.

Indonesia, last year the world's second-biggest exporter of LNG after Qatar, is increasing the use of natural gas at home to avoid costly imports and feed rising demand.

Higher domestic demand and declining output from ageing fields have left Indonesia struggling to meet its contractual commitments to traditional buyers such as Japan, South Korea and Taiwan, often agreed more than a decade ago.

Its exports of LNG will fall to 362 cargoes this year from 427 in 2010.

PLN requires 2,000 mmbtu a day of LNG but domestic supply contracts can only cover 1,200 mmbtu, Dahlan told the paper.

Indonesia expects to commission a 3 mtpa LNG receiving terminal early next year and is still looking for about 1.5 mtpa of supplies.

"We will keep looking for LNG supplies, not only from Iran but also from other countries," Dahlan said, adding that PLN has also expressed interest in buying from Papua New Guinea and Australia but no progress has been made so far.

The spokesman said though Indonesia is giving priority to domestic supply sources, it is also looking elsewhere because Indonesian gas is not sufficient to meet its needs.

Indonesia's state energy firm Pertamina and PLN said in March they planned to build 8 mini LNG receiving terminals in eastern Indonesia, with a total capacity of 1.4 million tonnes a year.