Govt plans to turn coal into fuel<\/p>\n
JAKARTA (JP): The government is studying the possibility of
\nestablishing a coal liquefaction plant to benefit from the
\ncountry's massive coal reserves, especially in South Sumatra,
\nMinister of Energy and Mineral Resources Purnomo Yusgiantoro said
\non Wednesday.<\/p>\n
Purnomo said he hoped that by 2010, the liquefaction of coal
\nwould result in a fuel output equivalent of between 100,000 to
\n150,000 barrels per day (bpd).<\/p>\n
\"It is possible, as there have been research studies conducted
\nin Japan and by the BPPT (Agency for the Study and Application of
\nTechnology). It is important now to turn that (research) into
\nconcrete steps,\" Purnomo told reporters on the sidelines of the
\ninternational conference on coal for energy security in the ASEAN
\nRegion, which was held by the ASEAN Forum on Coal (AFOC).<\/p>\n
To realize the coal liquefaction plan, he said, the project
\nhad to be commercially feasible.<\/p>\n
According to him, the costs of such a project could amount to
\nUS$1.5 billion.<\/p>\n
\"We will invite investors to develop this project in South
\nSumatra,\" he said.<\/p>\n
Investors, he said, were only interested in the project if
\nthey could buy the coal for approximately $10 per ton. At
\npresent, coal prices hover at approximately $28 per ton.<\/p>\n
Purnomo expected that an oil refinery could start operating by
\n2010 with a fuel output of up to 150,000 bpd.<\/p>\n
He said that the liquefaction of coal was necessary, in order
\nto reduce the country's growing dependence on oil.<\/p>\n
Indonesia is nearing a depletion of its oil reserves and the
\ncountry is estimated to become a net oil importer in 20 years
\ntime.<\/p>\n
\"Even though local fuel consumption continues to rise, our
\ncoal reserves are enough to last for more than 200 years,\"
\nPurnomo explained.<\/p>\n
He said that South Sumatra's coal reserves amounted to about
\n34 billion tons of coal. But because of the coal's mediocre
\nquality, the reserves were not commercial feasible for
\nexploitation.<\/p>\n
\"The technology to liquefy low quality coal is already there,\"
\nsaid R.A. Sunardi, AFOC chairman.<\/p>\n
Although the technology is still expensive, it would be
\ncommercially available sometime in the year 2005 or 2006, he
\nsaid.<\/p>\n
He added that tests by the BPPT reveal that coal in South
\nSumatra is the most suitable type in Indonesia for the
\nliquefaction project.<\/p>\n
Sunardi, who is also president of the state owned coal company
\nPT Bukit Asam, also expressed his interest in developing a coal
\nliquefaction project.<\/p>\n
\"We are definitely interested, because we have a huge
\nreserve.... about 5.5 billion tons of coal, of which most is of
\nlow quality,\" he explained.<\/p>\n
Bukit Asam<\/p>\n
Bukit Asam, he said, was not only interested in supplying its
\ncoal, but also in making the process of liquefaction, a business.<\/p>\n
Because of the project's high cost, Sunardi said he planned to
\ndevelop the project under a consortium.<\/p>\n
\"So far, no one has shown any interest, but that is because
\nthe project is still undergoing a feasibility study,\"<\/p>\n
He expected a completion of the study by either the end of
\nthis month, or the end of March next year.<\/p>\n
Bukit Asam's coal mine is located in Tanjung Enim, South
\nSumatra.<\/p>\n
Sunardi said that his company was unable to raise its coal
\nproduction level to 12.5 million tons per year, due to
\ntransportation constraints.<\/p>\n
A railway linking Bukit Asam's mine and its Lampung's Tarahan
\nport is currently operating at its maximum capacity of 11.5
\nmillion tons of coal, which is the company's production level, he
\nexplained.<\/p>\n
He said that, in order to raise the train's load capacity to
\n12.5 million tons of coal per year, state railway company PT
\nKereta Api Indonesia (KAI) must invest about Rp 630 billion
\n($66.3 million at the current exchange rate).<\/p>\n
Bukit Asam is willing to share the investment, but a
\ncontribution would depend on talks with PT KAI, he went on.<\/p>\n
Sunardi further said he was interested in buying PT Indocoal,
\na coal company put up for sale by the Indonesian Bank
\nRestructuring Agency (IBRA). He said that the funds for the
\nacquisition of Indocoal would come from Bukit Asam's own
\ncash flow.<\/p>\n
Director for coal mining at the Ministry of Energy and Mineral
\nResources, Suyartono, said that for this year, Indonesia would be
\nunable to meet its coal production target.<\/p>\n
According to him, of the targeted 83 million tons of coal, the
\ncountry's coal industry will only be able to produce between 75
\nto 76 million tons.<\/p>\n
Suyartono, in particular, blamed protracted labor conflicts at
\nPT Kaltim Prima Coal to have been the major cause for the dent in
\nproduction. (bkm)<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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