Coal Gasification Project to Slash LPG Imports, Develop Green Economy, and Bring Investments to Indonesia


  • There is potential to reduce LPG imports by 1 million ton per year and save Rp 9.7 trillion in forex reserves annually 
  • Foreign investment of US$2.1 billion to absorb 10,000 local workers 
  • Integration of CCUS with coal gasification project to push for green economy 


Jakarta, Indonesia, May 11, 2021 - PT Pertamina, PT Bukit Asam (PTBA), and Air Products & Chemicals Inc. (APCI) have ensured the continuation of the coal gasification project to process coal into dimethyl ether (DME) to reduce Indonesia's dependence on liquefied petroleum gas (LPG) imports. This is in line with Indonesia's efforts to achieve energy resilience and strengthen green economy as instructed by President of the Republic of Indonesia, Joko Widodo. 

This national strategic project will take place in Tanjung Enim for 20 years, bringing in foreign investment of US$2.1 billion, equal to Rp 30 trillion, from APCI. With the use of 6 million tons of coal per year, this project will be able to produce 1.4 million tons of DME per year in order to reduce LPG imports by 1 million ton per year and eventually improve the trade balance. In addition, this project is expected to bring multiplier effects, including attracting other investments to Indonesia. The project's compliance with the local content requirement (TKDN) will also empower the national industry through the employment of local workers. 

The continuation of the gasification project was marked with the signing of the Amendments to Cooperation Agreement on DME Development between Pertamina, PTBA and APCI, which took place in Los Angeles, the United States, and Jakarta, Indonesia, on May 11, 2021, by Pertamina President Director Nicke Widyawati, PTBA President Director Suryo Eko Hadianto, as well as APCI President and CEO Seifi Ghasemi. The signing was witnessed by Minister of State-Owned Enterprises (SOEs) Erick Thohir. At the same time, the DME Processing Agreement was also signed as part of the cooperation on the DME development. 

Minister of SOEs Erick Thohir welcomed this cooperation: "This (cooperation) is a manifestation of the close economic relations between Indonesia and the United States. Coal gasification will directly bring added value to the national economy at the macro level, as it is in line with President Joko Widodo's instruction to reduce dependence on imported products and do transformations to develop green economy as well as new and renewable energy. The coal gasification partnership can save up to Rp 9.7 trillion in foreign exchange reserves per year and absorb 10,000 local workers." 

Pertamina President Director Nicke Widyawati said, in accordance with the president's instruction through the National Energy Grand Strategy, that energy transition, green energy, and circular energy were priorities. "Pertamina as an SOE has formulated a strategy that is in line with the government's directive to achieve the targets to be free of LPG imports by 2027 and reduce carbon emissions by 2030," said Nicke. 

Moreover, Nicke said Pertamina also understood that the development and production of DME was related to environmental issues. Hence, in accordance with the government's directive, Pertamina will run the DME project in parallel with the carbon capture, utilization and storage (CCUS) project. That way, carbon emissions can be cut down to 45%. Pertamina is exploring possibilities to cooperate with Exxonmobil regarding the CCUS. By using the CCUS, it is expected that emissions from the gasification process can be utilized to boost the production of old wells and, thus, push for the realization of green economy in other similar projects. 

PTBA President Director Suryo Eko Hadianto added that all parties involved in today's signing would work hard to realize the project's construction. "We believe that today's signing is a significant leap in the development of this cooperation project, and we are optimistic that this project can run on time," he said. 

PTBA also emphasizes that this cooperation has been part of its new portfolio because, now, the company is not just selling coal, but also producing downstream products to increase the added value of coal.

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