Minister for Petroleum and Energy William Duma said Itochu and Mitsubishi Gas Chemical Company had provided a proposal for the downstream processing of ethanol and DME.
But Duma said while it would not happen immediately under the current LNG arrangement with ExxonMobil, there was a clause in the InterOil driven project.
The Post Courier reported Duma making the comments in response to questions from Daulo MP Ron Ganarafo, who asked during question time if there were plans in place to refine oil and gas for diesel, kerosene, cooking gas and other products.
"At that time we were negotiating with the world's largest energy company ExxonMobil and as a government in the view of attracting investment we had to make a conscious decision to give away some concessions in order to attract investment for the first time in our country and that was a pioneer investment particularly in the LNG sector," Duma said.
He told Parliament the agreement specifically provided that no gas would be set aside for downstream processing in relation to the 9 trillion cubic feet of gas, mainly from Hides 1 and Hides 4, and some condensates from the existing oil fields.
"This agreement based on the 9 trillion cubic feet of gas will go for 30 years and as we know ExxonMobil is still conducting on-going exploration activities in the fields of Angore and Juha," he added.
"There is a review clause that when ExxonMobil and partners find more gas, than we will review the project agreement and the state will negotiate a different set of packages with the developer, including provision for downstream processing."
He said the InterOil project in Gulf had a clause that it recognised and project partners had agreed to set aside gas for downstream processing.
"I am pleased to again report to parliament that the government now has a definite and concrete proposal from a Japanese consortium led by Itochu and Mitsubishi Gas Chemical Company," Duma said.
Another Japanese company has also shown interest.
Duma said the government was looking at the economics of the proposal.
