• Indonesian coal gasification plans may be security trumping cost

    Date posted:

    • Post Author

      Patrick Lavery

      Combustion Industry News Editor

Indonesia’s plans to gasify domestic coal in order to reduce imports of LNG will require the country to subsidise the process in order to make it cost-competitive, Asia’s largest coal event – Coaltrains Asia – has heard. Indonesia’s government is aiming to produce dimethyl ether from coal, and state-owned coal company Bukit Asam is working with US Air Products and Chemicals Inc to develop a 1.4 million tonne/annual coal gasification plant to be operation by 2024, at a cost of US$2.1 billion (€1.75 billion). The Institute for Energy Economics and Financial Analysis has estimated that the cost of dimethyl ether per tonne will come out at around US$470/tonne (€392/tonne), almost twice what Indonesia pays for LNG imports; during the event, the economics of DME production were diplomatically described by Dharma Djojonegoro, deputy chief executive of PT Adaro Power as “in question”. Security of energy supply, however, may be a major consideration for Indonesia, as it imports 73% of the natural gas it uses.