Coal Gasification in Tanjung Enim Cuts LPG Imports by Up to 1 Million Tones per Year

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 163.Pers/04/SJI/2020

Date: 11 May 2021

Coal Gasification in Tanjung Enim Cuts LPG Imports by Up to 1 Million Tones per Year

The coal to Dimethyl Ether (DME) gasification project to reduce dependence on imports of Liquified Petroleum Gas (LPG) and cut LPG subsidies is certain to continue. The certainty is shown by the signing ceremony of Cooperation Agreement Amendment and Processing Service Agreement of DME Coal Gasification between PT Pertamina (Persero), PT Bukit Asam Tbk (PTBA), and Air Products & Chemical Inc (APCI), done online in Jakarta and in Los Angeles, the United States on Tuesday (11/5).

The National Strategic Project will be carried out in Tanjung Enim in South Sumatra for 20 years, attracting a foreign investment from APCI of USD2.1 billion or equivalent to Rp30 trillion. Consuming 6 million tonnes of coal per year, this project can generate 1.4 million DME per year to reduce LPG imports by 1 million tonnes per year. The project will improve trade balance, provide a multiplier effect in the form of other foreign investments, and empower the national industry by absorbing local workers.

Minister of State-Owned Enterprises, Erick Thohir, said the Indonesian government fully supports the gasification project.

"This (cooperation) shows close economic relations between Indonesia and the United States. Coal gasification offers direct added value to the national economy at a macro level, and is in line with the directive of President Joko Widodo to reduce dependence on imported products and to transform to green economy as well as new and renewable energy. The coal gasification cooperation can save the foreign exchange reserves by up to Rp9.7 trillion per year and absorb 10,000 workers," said Erick.

On this occasion, President Director of PT Pertamina (Persero) Nicke Widyawati said that energy transition, green energy, and circular energy are current priorities, and in line with the National Grand Energy Strategy directed by President Joko Widodo.

"Pertamina, as a state-owned enterprise, has reformulated its strategies to become in line with the government's objective of making a 41% reduction in carbon emissions by 2030," Nicke said.

Nicke went on to say that Pertamina also realizes that the development and production of DME are related to environmental issues. Therefore, according to government guidance, Pertamina will run the DME project in parallel with a Carbon Capture Utilization and Storage (CCUS) project so that carbon emissions can be reduced by up to 45%.

President Director of PT Bukit Asam Tbk (PTBA), Suryo Eko Hadianto, added that the parties to today's agreement will work hard to run the project immediately.

"We believe that today's signing ceremony is a significant leap in the project development, and we are optimistic that this project can be completed on time," he said.

Suryo also emphasized that the cooperation will become a new portfolio for his company. PTBA will no longer sell coal only, but instead it has started to offer downstream products to increase added value.

For the record, the Cooperation Agreement Amendment and Processing Service Agreement of DME Coal Gasification between Pertamina, PTBA, and APCI was signed by President Director of Pertamina Nicke Widyawati, President Director of PTBA Suryo Eko Hadianto, Director of Business Development of PTBA Fuad I.Z. Fachroeddin, and President & CEO of APCI Seifi Ghasemi, and witnessed by Minister of State-Owned Enterprises Erick Thohir. (IY)

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