PENNSLYVANIA based Air Products has signed a definitive agreement to build, own and operate a coal to methanol production facility in Bengalon, East Kalimantan, Indonesia.

Under the long-term on-site contract, which was signed on May 14, PT Bakrie Capital Indonesia, part of the Bakrie Group, and PT Ithaca Resources, part of PT AP Investment, will supply the coal feedstock and have committed to offtake the methanol production for sale within Indonesia.

Air Products will invest around US$2 billion in the air separation, gasification, syngas clean-up, utilities and methanol production assets to produce methanol for Bakrie and Ithaca.

The facility will use Air Products’ proprietary Syngas Solutions dry feed gasifier, and will enable nearly 2 million tons per year (TPY) of methanol to be produced from nearly 6 million TPY of coal. The project is expected onstream in 2024. 

"This is another example of our long-term strategy to deploy capital into high-return strategic industrial gas projects," comments Seifi Ghasemi, Air Products’ chairman, president and chief executive officer. 

As Southeast Asia’s largest economy, Indonesia is committed to reducing its energy imports, in line with President Joko Widodo's energy plan.

The megaproject will provide methanol for domestic consumption to support economic growth, using its abundant domestic coal reserves. However, Indonesia remains very heavily reliant upon coal fired power generation, and critics would like to see a bigger role for renewables in its energy planning.

Bakrie Group is one of the leading corporations in Indonesia. Its business activities have expanded to include general trading, manufacturing, construction services, agribusiness, mining (coal and mineral), oil & gas, and media telecommunications. It also participates in strategic infrastructure development efforts in the energy and transportation sectors.

The group, through Indonesia Stock Exchange listed PT Bumi Resources, operates two coal mining facilities, PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia (Arutmin).

AP Investment through PT. Ithaca Resources also has several coal mining licenses, including PT. Kaltim Nusantara Coal (KNC). The coal gasification that will be built in this cooperation is designed to convert coal to syngas for methanol production from coal supplied from KPC and KNC. 

New York Stock Exchange listed Air Products is a leader in gasification projects around the world. In addition to the new project in Indonesia, it is executing a number of gasification projects in China as well as the Jazan project in Saudi Arabia. 

The company develops, engineers, builds, owns and operates some of the world's largest industrial gas projects, including gasification projects that sustainably convert abundant natural resources into syngas for the production of high-value power, fuels and chemicals. In 2019, it had fiscal sales of US$8.9 billion from operations in 50 countries and has a current market capitalization of about US$50 billion.