Indonesia's Plan to Convert Coal into Petrol: Understanding the Process
The Indonesian government is encouraging the development of coal downstreaming to produce methanol, which can be utilised as a component in fuel blends.
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 with significant coal reserves. One such development is currently underway in East Kalimantan.
“I personally conducted the groundbreaking for these activities. Some projects in East Kalimantan have already commenced. We are also pushing for activities in South Sumatra, where there are areas with substantial coal potential. We are primarily focusing on using low-calorific 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 the processing of 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, converting 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 this 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 refined into derivatives such as Dimethyl Ether (DME) or gasoline. However, Sudirman emphasised that the greatest challenge is not technological readiness, but rather the 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 deterrent for private companies considering entering coal-to-petrol processing projects.
Sudirman cited the coal-to-DME project, which previously planned to involve the American company Air Products. The 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 concluded.