Sasol, Darma Henwa eye cooperation in liquefied coal project

South Africa Synthetic Oil Liquefaction (SASOL) Synfuels International, a synthetic fuel giant producer from South Africa, are interested to cooperate with PT Darma Henwa Tbk to produce coal-based liquid fuel in South Sumatra.

"They (Sasol and Darma Henwa) are expected to form a consortium," Bakin Daulay, the head of the Ministry of Energy and Mineral Resources' Center for the Coal and Mineral Research and Technology Development said on Wednesday.

Bakin made the statement while accompanying some of Sasol's leaders make a courtesy call on Minister of Energy and Mineral Resources Purnomo Yusgiantoro.

The visiting Sasol leaders are identified as Ed Cameron, Stefan Opperman, Nicole Jordaan, and Johannes Vanzyl

According to Bakin, Sasol is interested in the planned project to liquefy the low-calorie coal deposit of Darma Henwa's mine in Pendopo, South Sumatra. The Pendopo mine is said to hold 3 billion tons of coal. Darma Henwa is partly owned by Indonesian conglomerate Bakrie Group.

"They will visit the location tomorrow (Thursday)," Bakin said.

Sasol is expected to produce 80,000 barrels per day of diesel from the coal. It needs 80,000 tons of low-ranked coal to produce such an amount of diesel. The production cost is between US$50 and $60 per barrel, according to Bakin.

"The price is competitive enough against the oil price at $100 per barrel," Bakin said.

State owned oil and gas company PT Pertamina will act as the offtaker while PT Rekayasa Engineering will handle the construction of the coal liquefaction plant.

The project is expected to cost between $7 and $10 billion.

"This will be the first project of its kind in the country and it needs huge investment. As such, it needs incentives," Bakin said. (Godang)