The Investment Coordinating Board (BKPM) and the world’s top fuel producer Sasol are to conduct a feasibility study on a potential coal-to-liquid facility in Indonesia that could generate 80,000 barrels per day, a project that could require US$10 billion in investment.
BKPM and the South African synthetic fuel producer signed a Memorandum of Understanding (MoU) Thursday in London, according to a BPKM statement, on a feasibility study of the proposed facility, which would produce high quality ultra-clean transportation fuels.
“The technology could help unlock Indonesia’s abundant coal reserves and would improve Indonesia’s energy security by reducing its dependency on imported fuels,” new BKPM head Gita Wirjawan said during the signing.
He added that the cooperation was in line with Indonesia’s 2025 energy policy blue print, which aims to diversify energy use.
The country has an estimated 60 billion tons of coal reserves, 85 percent of which is lignite, low-grade coal with a relatively low sale value. The planned facility will use this kind of coal as its raw material.
Sasol is currently the only coal-based synthetic fuel producer in the world that operates commercially on a large scale with a capacity of approximately 160,000 barrels of crude oil equivalent per day, the statement said.
Following the signing of the MoU with BKPM, Sasol is expected to sign another MoU with state oil and gas firm Pertamina on the project.
The planned MoU between the two companies would allow the forming of a preliminary arrangement between Pertamina, as off-taker, and a potential coal-to-liquids joint venture as a supplier of synthetic fuel.
Indonesia has been a net importer of oil due to rising domestic consumption and declining production. The government has been seeking ways to improve production. - JP