A memorandum of understanding was signed between Inpex Masela Ltd and PT Perusahaan Gas Negara, but a spokeswoman for regulator SKK Migas said the size of the sale was still being discussed.

Indonesia approved last year Inpex's revised development plan for the $20 billion Masela project, which is among the biggest gas ventures in the Southeast Asian country.

It is expected to produce around 9.5 million tonnes of liquefied natural gas per year and supply 150 million cubic feet of natural gas daily through pipelines.

In February, Inpex signed an memorandum of understanding for gas supply with Indonesia's state electric company PT Perusahaan Listrik Negara and fertilizer maker PT Pupuk Indonesia.

(Reporting by Fransiska Nangoy, Agustinus Beo Da Costa; Editing by Martin Petty)