Last year, Indonesia announced that they have prioritised a coal gasification project in Tanjung Enim, South Sumatra, as one of the top strategic projects in the country.
Fast forward to 2021, an agreement was signed among PT Bukit Asam Tbk (PTBA), PT Pertamina (Persero), and Air Products and Chemicals Inc to develop and implement this project. These companies will be investing around USD$ 2.1 billion into this project. The coal gasification plant was reported to be able to transform 6 million tonnes of coal per year into 1.4 million tonnes of DME.
With this production rate, the country would be able to reduce the import of LPG by around 1 million tonnes per year, of which 76% of national needs are imported with a subsidy value of USD$3 billion per year.
This project will process coals into Dimethyl Ether (DME) and can be used as an alternative to LPG. DME can be handled and stored like Liquefied Petroleum Gas (LPG) and both fuels have almost similar chemical properties. DME is a potential diesel fuel because it has a high Cetane rating (55-60) and can be produced as a biofuel.
Indonesia is rich in the sources of DME therefore it is naturally more attractive for the country to use DME, compared to using LPG. Furthermore, DME is degradable in the atmosphere and is currently not categorised as a greenhouse gas.
The coal gasification cooperation was estimated to help the country to save foreign exchange reserves of up to USD$700 million per year and might be able to create an additional 10 thousand jobs from this project.
Aside from this, PT Pertamina is also exploring the potential cooperation with ExxonMobil in exploring other types of Carbon Capture Utilization and Storage (CCUS) projects. Indonesia hopes that with the initiation of CCUS projects, they would be able to increase production in old wells with the emissions that are generated from the gasification process.
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