Pertamina may participate in $1.9 bln DME plant project

State-owned oil, gas firm PT Pertamina may participate in an estimated $1.9-billion dimethyl ether (DME) project that will be built by a private domestic firm, a senior company official said on Tuesday.

DME is a methanol derivative with properties similar to liquefied petroleum gas, although it is said to be cleaner burning.

Private firm PT Arrtu Mega Energie will build the DME plant in Riau province. It will have a capacity of 1.2 million tons a year.

Construction is expected to start in 2010 and the plant, the country's first of such facility, will be commercially operational in 2013. "This is business. If the project is good and economically okay, why not to participate? We will discuss at the board of directors meeting," Pertamina marketing director Achmad Faisal told reporters.

Faisal said Pertamina was interested in buying the DME if the price is competitive.

"We need cleaner energy for the future. Indonesia needs DME and it can be blended with liquefied petroleum gas (LPG)," he said.

Christoforus Richard, PT Arrtu Mega president director, said the company will seek a loan from foreign and domestic banks to finance 70 percent of the investment. The rest will come from internal funds.

He said the project will need about 5-6 million tonnes of coal a year as feedstock and will source the coal from PT Tambang Batubara Bukit Asam (PTBA). "We don't have to worry about coal because Indonesia has big coal reserves," Richard told reporters. (*)