Pertamina sees strategic role of coal gasification project

State-owned oil and gas firm PT Pertamina said that coal gasification project to convert coal into gas is quite strategic for the company in helping to deal with increasingly limited future oil and gas production in the country.

Pertamina Director of Investment Planning and Risk Management, Gigih Prakoso said that the country has huge coal reserves that can be utilized for the next 200 years to be among others converted into gas, a raw material for production of key commodities such as LPG, fertilizer and propylene, which is a raw material for plastics production.

?It is in our interest, because it (coal gasification) can produce methanol which can later be converted into ethanol to be mixed in gasoline. It can also produce dimethyl ether (DME) which can replace imported LPG. So, there will be diversification of energy in the future,? he said as quoted by Bisnis Indonesia Saturday.

He was commenting on the heads of agreement signed on Friday by Pertamina, IDX-listed coal giant PT Bukit Asam Tbk (PTBA), IDX-listed petrochemical firm PT Chandra Asri Petrochemical Tbk, and state-owned fertilizer firm PT Pupuk Indonesia to develop a joint coal gasification project to produce syngas at PTBA?s Tanjung Enim mine site, South Sumatra Province, where the latter firm is also planning to develop a giant coal-fired power plant (PLTU Sumsel-8).

While the four companies have yet to complete the required feasibility study, PTBA President Director Arviyan Arifin said that construction of the syngas plant is expected to start at the end of 2018 or early 2019 in the hope that it can start operation in November 2022. The plant will require some 9 million tons of coal per annum.

He said that investment requirement of the project and ownership distribution have yet to be decided, the four firms will each contribute to the funding of the project. Pertamina, Pupuk Indonesia, and Chandra Asri will be the off-taker of the syngas output, from which Pupuk Indonesia plans to produce 500,000 tons of urea, Pertamina to produce 400,000 tons of DME, and Chandra Asri 450,000 tons of propylene.

Director General of Chemical, Textile and Miscellaneous Industries, Sigit A. Dwiwahjono said that coal gasification is quite suitable to be developed in Indonesia which has huge coal reserves.

He said that there are a number of coal mines in the country particularly in South Sumatra and East Kalimantan where coal gasification project can be developed by converting lignite coal with CV of 2,500-3,500 kcal per kg into gas. This category of coal is generally not absorbed by both the domestic and export markets. (*)