Coal gasification project: Development scheme still being reviewed
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Proyek Gasifikasi Batu Bara: Skema Pembangunan Masih Dikaji
18 August 2021
By: Denis Riantiza Mellanova
Bisnis, Jakarta – PT Bukit asam Tbk, PT Pertamina (Persero), and Air Products & Chemicals Inc are still reviewing the factory construction schemes of the coal gasification project.
Bukit Asam (PTBA) President Director, Suryo Eko Hadianto, said that there were two factory construction schemes that were being considered, which were to build a factory that integrated the coal gasification project to produce dimethyl ether (DME) or to produce methanol.
Hence, PTBA with Pertamina and Air Products are currently preparing a cooperation agreement regarding the DME factory construction scheme that planned to build the factory in Tanjung Enim, South Sumatra.
“We are preparing a more detailed agreement,” Suryo said on Monday (16/8).
According to him, if the factory produces methanol, the factory will boost the domestic DME industry. Methanol products can be sold to the market to be processed into DME by smaller industries.
On the other hand, constructing a coal gasification factory that integrates DME production requires a large investment, which means it can only be developed by large companies. For example, the DME project developed by PTBA that produces DME of up to 1.4 million tonnes per year requires an investment of up to US$2.1 billion.
Suryo added that the project was predicted to commence commercial operation at the end of 2024 or at the start of 2025.
Moreover, Suryo is optimistic about the DME project becoming a more economic replacement for LPG. Furthermore, the government, through Law No. 11 of 2020 on Job Creation, has provided an incentive of 0% royalty on coal utilised for downstreaming.
DME production cost is currently still around US$490 per tonne. This amount does not include the carbon capture cost that is predicted to reach around US$20 to US$40 per tonne.
“So, [the price of DME is] around US$550 per tonne. However, domestically, there are still costs for distribution and other aspects. This is still being calculated,” he stated.
Meanwhile, Special Staff to the Energy and Mineral Resources Minister for Mineral and Coal Acceleration and Governance, Irwandy Arif, said that LPG demand continued to increase, and around 75% to 78% of domestic LPG consumption were provided by imports that reached 6.1 million tonnes in 2020.
DME can substitute LPG. “One tonne of coal can produce 0.72 tonnes of methanol or 0.36 tonnes of DME,” Irwandy said.
The government has set a coal downstreaming roadmap until 2045, which is expected to absorb workforce and empower the public.
In the roadmap, the government is targeting to increase the gasification industry’s capacity to produce 19.81 million tonnes of methanol to lower LPG imports by 8.46 million tonnes by substituting it with DME from 2036 to 2045.
During the period, the coal downstreaming industry is also expected to increase coal to 40.7 million tonnes.
Boost utilisation
Meanwhile, PT Pamapersada Nusantara, subsidiary of PT United Tractors Tbk (UNTR), is currently diving into coal downstreaming and carbon capture technology.
Pamapersada Nusantara (PAMA) President Director, Frans Kesuma, realises that pressure on the coal industry is increasing along with the push from the international world to transition to clean energy. According to him, there are two ways to mitigate the pressure.
“Downstreaming and carbon capture utilisation and storage (CCUS). We realise that the pressure on the industry is quite heavy and we can mitigate it that way,” Frans said.
According to him, carbon capture technology is a solution to still utilise coal without breaking Indonesia’s commitment in the Paris Agreement to lower carbon emission.
