Indonesia Energy Ministry: LPG Substitution Projected, Gasification Becomes Coal Company’s New Business Pillar

The gasification project is certain to be a new business support for coal companies. As a National Strategic Project (PSN), gasification is projected as a substitute for Liquified Petroleum Gas (LPG) so as to reduce dependence on imported fuel oil (BBM) in meeting domestic energy needs.

“Nowadays coal companies are looking at gasification, this is the right step in reading future energy business opportunities. The government ensures that increasing the added value of coal can be a supply for domestic industrial development. So it’s not just a commodity,” said the Head of the Bureau of Communications, Public Information and Cooperation (CLIK) of the Ministry of Energy and Mineral Resources Agung Pribadi in Jakarta, Sunday (25/7).

Previously, during a virtual discussion “Open-Open” with the theme “Bukit Asam Looks At Renewable Energy Business”, PT Bukit Asam Tbk (PTBA) President Director Suryo Eko Hadianto emphasized that the gasification project is a major need for the company. “This gasification will be one of the business pillars (of the company) going forward,” Suryo said at a discussion held via the Ministry of Energy and Mineral Resources’s Instagram Live, Friday (23/7).

Although PTBA still controls coal reserves of more than 3 billion tons and can be used for the next 100 years with an average production of 30 million tons per year, Suryo believes that meeting energy needs at that time no longer relies on coal. “One hundred years from now, coal will be abandoned. So we must empower it as soon as possible, one of the breakthroughs is coal gasification,” he explained.

Gasification itself, continued Suryo, will be a derivative product of coal ( coal derivative ). “PTBA’s gasification process is to convert coal into Dymethil Ether (DME) whose function is to replace LPG,” he said.

According to Suryo, Indonesia still imports around 7 to 8 million tons of LPG per year. For this reason, the gasification project is expected to be able to answer energy independence. “What PTBA (gasification) has done is in line with President Jokowi’s program to reduce imports,” he explained.

Suryo ensured that the gasification project will be running immediately. The certainty of the continuation of the gasification project was marked by the signing of the Amendment to the DME Development Cooperation Agreement between PTBA, PT Pertamina, and Air Products & Chemicals, Inc. (APCI). “The operational agreement and processing agreement have been signed,” he said.

The plan is that this project will be carried out in Tanjung Enim for 20 years. With the utilization of 6 million tons of coal per year, this project can generate 1.4 million DME per year to reduce LPG imports by 1 million tons per year so as to improve the trade balance.

In addition, this project is expected to provide a multiplier effect , including attracting other foreign investment, also through the use of the TKDN portion in the project which is expected to empower national industry by absorbing local workers. “Together with the Ministry of Energy and Mineral Resources, the Coordinating Ministry of Maritime Affairs and Investment and SOEs, we are currently drafting regulations to elaborate on this collaboration,” said Suryo.