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Air Products’ exit deals blow to RI’s downstream coal dreams
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Coal is moved from barges onto a truck at the Karya Citra Nusantara Port in North Jakarta on Jan. 13, 2022. (Reuters/Willy Kurniawan)
T
he withdrawal of United States chemical company Air Products from all downstream coal projects in Indonesia could spell the end of the government’s plans to develop the sector, analysts say.
Prior to its exit, Air Products had been working on gasification projects, one to convert coal into dimethyl ether (DME) and another to convert it into ethanol.
The former initiative involved state-owned mining firm PT Bukit Asam (PTBA) and state-owned oil and gas giant Pertamina, while the latter involved PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia, both subsidiaries of PT Bumi Resources, jointly controlled by the Bakrie Group and Salim.
Air Products had been expected to invest at least US$2.3 billion in the coal-to-DME gasification project alone, making it by far the largest coal gasification investment in Indonesia.
The project was supposed to help Indonesia slash its reliance on imported liquified petroleum gas (LPG) and oil.
Putra Adhiguna, an energy finance analyst at the Institute for Energy Economics and Financial Analysis (IEEFA) said Air Products’ departure represented a formidable challenge for the country’s downstream coal ambitions.
“It marks a pivotal turning point in Indonesia’s attempt to economically convert coal into other products,” Putra told The Jakarta Post on Friday.
