Construction costs are estimated at around $1 billion, with first production expected in the second quarter of 2011, the Jakarta Post reported.

Mahfoedz said the project could bring in up to $US6 billion in revenue for Indonesia under the 15-year production-sharing contract, which gives the Government an 85% split of project revenue.

LNG from the plant is expected to be exported to Japan despite increasing domestic demand.

Japan is hoping Indonesia will continue to supply LNG and had allegedly demanded the continuity of Indonesia's gas exports in the recently-signed economic partnership agreement between the two countries.

Under existing contracts, Indonesia supplies 12 million tonnes of LNG a year to Japan.

Mitsubishi has a 51% stake in the LNG plant while Pertamina and Medco own the remaining 29% and 20% respectively.

The project already has a controversial history. It was originally to have been a smaller project to be built by Australian junior Liquefied Natural Gas Ltd, but Pertamina instead decided to join Japanese giant Mitsubishi in a larger LNG plant.

LNG Ltd has repeatedly said this shift violated a May 2005 Exclusivity Agreement for gas supply from the Senoro fields.

LNG Ltd, which also has projects in Australia, Iran and PNG, has said it would continue to maintain a presence in Indonesia and to seek other opportunities.