Launch of new plant will reduce liquefied gas imports
The Indonesian government is taking active steps to reduce the country’s energy dependence. As part of this, the authorities intend to reduce liquefied gas imports by building their own plant. Investors are building the new plant with an investment of more than US$3 billion.
State-owned company Bukit Asam, in partnership with the US-based company Air Products and Chemicals, are constructing the plant. According to the project plan, the enterprise will carry out coal gasification. This will enable the country to produce energy domestically and optimise the use of local coal resources.
Investors are building the plant in South Sumatra, one of Indonesia’s key mining regions. Construction, which has already begun, is expected to take approximately 30 months. The plant will process up to six million tonnes of low-grade coal per year to produce around 1.4 million tonnes of dimethyl ether.
Implementing this project will enable Indonesia to reduce its LPG imports by 1 million tonnes per year. This will be an important step towards strengthening the country’s energy independence.
Government plans
The authorities intend to use local coal as the main raw material for the new plant. However, climate targets may hinder the realisation of such plans:
Indonesia must achieve net-zero emissions by 2060. Increased use of coal could make this commitment more difficult to achieve, as coal is a major source of CO₂ emissions.
The problem is particularly acute against a backdrop of growing consumption of the resource. Coal remains a key source of energy in Indonesia, particularly in the power sector.
Meanwhile, the country’s demand for liquefied petroleum gas continues to grow. Current capacity cannot cope with demand, fuelling increased imports. President Joko Widodo has announced that the government is prepared to cut subsidies by Rp 7 trillion. This will strengthen the trade balance and reduce the state budget deficit.
Through a series of steps, the Indonesian authorities plan to reduce gas purchases by the end of 2025. It is expected that imports will be reduced by around sixfold by increasing coal gasification. Coal gasification is currently a national priority and receives heavy subsidies.
Other steps to reduce gas imports
Several large offshore gas fields lie off Indonesia’s coast. Both local and foreign companies are actively developing them. Among these companies is Italy’s Eni, which began producing gas at the Merakes East site in early 2025.
The field is located 1.6 kilometres below the surface. The facility’s daily production volume is around 18 thousand barrels. The country intends to use the gas to meet its domestic needs. After production, liquefaction takes place at the plant.
It is worth noting that work in the field began two years after Eni announced the investment.
