Great Potential! These Two Regions to Become Bases for Converting Coal into Petrol
The administration of President Prabowo Subianto is encouraging the development of coal downstreaming to produce methanol, which can be utilised as a component for blending into fuel.
The Deputy Minister of Energy and Mineral Resources (ESDM), Yuliot Tanjung, stated that the government is promoting investment in coal processing into methanol in several regions possessing significant coal resources. One such development is located in East Kalimantan.
“I personally conducted the groundbreaking for those activities. Some projects in East Kalimantan have already commenced. We are also pushing for activities in South Sumatra, as there are areas with substantial coal potential. We are primarily using low-caloric coal, involving technological cooperation,” said Yuliot, as reported on Wednesday (30/09/2026).
Furthermore, Yuliot explained that the product resulting from this downstreaming process is not directly petrol. The stage currently being promoted by the government is processing coal into methanol.
“Methanol can be used as a blending agent for fuel,” he added.
Previously, the Chairman of the Indonesian Mining Experts Association (Perhapi), Sudirman Widhy, stated that, technologically, processing coal into petrol or gasoline is highly feasible.
“In general, converting coal into gasoline is very possible. The technology for this already exists,” he told CNBC Indonesia on Wednesday (23/09/2026).
According to him, one country that possesses such technology is South Africa, through the company Sasol. That company operates Coal to Liquid (CTL) facilities to process coal into liquid products.
Sudirman explained that the process of converting coal into petrol begins by transforming coal into synthetic gas (syngas). Coal is reacted with oxygen and steam at high temperatures and pressures to produce synthesis gas consisting of carbon monoxide (CO) and hydrogen (H2).
Syngas is then further processed into methanol, which can subsequently be processed into derivatives such as Dimethyl Ether (DME) or gasoline. However, Sudirman emphasised that the greatest challenge lies not in technological readiness, but in investment and production costs.
“The main issue is not about technology, but rather economic viability,” he said.
He noted that the high requirement for investment could be a consideration for private companies looking to enter coal-to-petrol processing projects.
Sudirman cited the coal-to-DME processing project, which previously planned to involve the American company Air Products. That company eventually withdrew from the project plan, partly due to economic considerations.
“It is proven that recently, Air Products from the United States withdrew and was reluctant to continue the plan for DME production from coal, primarily due to economic reasons,” he said.