The Industrial Estate Authority of Thailand (IEAT) said on Tuesday it had signed an agreement worth $1.33 billion with Gulf MPT LNG Terminal Co. to build the country’s third liquefied natural gas (LNG) import terminal.

The government said the project will bring more investment to the industrial east coast and boost economic growth in the area. Commercial operations for the project are slated to begin by 2025. Gulf MPT is a joint venture (JV) between a subsidiary of Gulf Energy with a 70% stake and a unit of Thailand state-owned energy major PTT with a 30% stake.

The deal includes the design and construction of the port and an LNG terminal with a regasification capacity of 5 million metric tons/year (mmty) in its first phase, and up to 10.8 mmty at a yet to be determined second phase, Gulf Energy said.

The disclosure comes as Thailand, southeast Asia’s second largest economy after Indonesia, faces gas production shortfalls at its offshore fields in the Gulf of Thailand, which accounts for most of the country’s gas output.

According to Thai government data, the country’s marketed natural gas production increased substantially for several years but peaked in 2014 at close to 1.5 Tcf (42.5 bcm). Other than a slight rebound in the first quarter of this year, natural gas output in Thailand has declined over the past five years.

Thailand has increasingly turned to LNG imports, revealing a much needed market for LNG producers looking to sign supply agreements as well as selling uncontracted volumes during the ongoing supply overhang of the fuel. In 2018, Thailand’s LNG imports increased 16% year/year amid domestic gas production declines and less pipeline gas imports from Myanmar, the government said.

PTT operates the country’s only LNG import facility, the Map Ta Phut LNG project, southeast Asia’s first LNG import terminal. It has a regasification capacity of 11.5 mmty. The company is also increasing loading facilities at the project.

PTT is also constructing the new Nong Fab LNG import terminal in Rayong. The terminal is expected to have a regasification capacity of 7.5 mmty and become operational by 2022. The company awarded an engineering, procurement and construction contract to a JV of Saipem and CTCI in June.

State-owned EGAT’s planned 5 mmty floating storage and regasification unit in the Gulf of Thailand was put on hold in May by the country’s energy and planning office, which cited doubts about the volume of LNG matching utilization rates. Energy Minister Siri Jirapongphan said he was “concerned that once EGAT makes the massive LNG purchases, they cannot be fed to generate the power, resulting in a ‘take or pay’ situation.”