BLOOMBERG/Sasol Withdraws From $10 Billion Project in Indonesia Over Lack of Coal
By Bambang Djanuarto & Carli Lourens
Sasol Ltd., the largest producer of motor fuels from coal, abandoned a plan to build a $10 billion coal-to-fuels plant in Indonesia to focus on opportunities in the gas-to-fuels industry.
The South African company wants to accelerate talks with the Indonesian government about other gas-to-liquids projects, Sasol said in an email on Tuesday.
The Johannesburg-based firm will not pursue other coal-to-fuels projects after the current ones in China and India, it said.
“Sasol retracted its investment because [Tambang Batubara] Bukit Asam stated that it could not supply the coal needed for coal gassification. Without the supply, the project will not move on,” Investment Coordinating Board (BKPM) chairman Gita Wirjawan said.
He added that state oil and gas firm Pertamina was ready to step in and buy the end product.
A “structural shift” in gas prices, which are now likely to remain at “depressed” levels, make gas-to-fuels an attractive industry, Sasol said last month.
Sasol, which built the world’s first commercial-sized gas-to-fuels plant in Qatar, plans to buy a stake in Talisman Energy Inc.’s Canadian shale-gas assets and may also build a motor-fuels plant in the country.
Sasol uses proprietary technology to produce diesel, gasoline and jet fuel from coal and gas.
Sasol signed a memorandum of understanding with Indonesia for the possible development of an 80,000 barrel per day coal-to-fuel plant, it said in 2009.
In January that year, Bukin Daulay, head of coal and mineral research at the Energy Ministry, said Sasol could spend $10 billion on the plant.
Bukit Asam, an Indonesian coal company, could only supply 500 million metric tons of coal for the project, which would need about 1 billion metric tons, said Nurtima Tobing, the company’s head of investor relations.