Govt Launches Coal Gasification Project to Boost Downstream Industry in Kutai

RRI.CO.ID, Kutai Timur — The Indonesian government has officially commenced construction on a Coal Gasification National Strategic Project (PSN) to produce methanol in Bengalon, Kutai Timur, East Kalimantan, aimed at strengthening downstream industrial capacity for both global and domestic markets. Launched on Monday, August 31, 2026, this transformative initiative converts low-calorie coal into 2 million tons of methanol annually, significantly reducing reliance on imports.

This strategic facility occupies 93 hectares within the Batuta Chemical Industrial Park (BCIP). The project is managed by PT Bumi Etam Chemical (BEC), a joint venture between PT Arutmin Indonesia and PT Kaltim Prima Coal (KPC).

Vice Minister of Energy and Mineral Resources (ESDM) Yuliot Tanjung, emphasized that the groundbreaking ceremony serves as concrete proof of the government's commitment to increasing the value of national natural resources. This effort is expected to drive energy independence while strengthening the domestic manufacturing sector.

"This groundbreaking marks the start of concrete steps toward building a coal-downstream-based methanol industry. This project is part of our efforts to increase the value added of natural resources, strengthen domestic industry, reduce import dependence, and support national energy security and self-sufficiency," Yuliot said.

The processing plant is designed to consume approximately 7.7 million tons of low-calorie coal each year to produce international-grade methanol. The output will support supply chains for the petrochemical and formaldehyde industries, as well as the development of the B50 biofuel program.

In addition to adding value to raw materials, this modern facility is equipped with Carbon Capture and Storage (CCS) technology to minimize carbon emissions during production. The project is also expected to create a strong multiplier effect for the local economy by creating new jobs.

Yuliot added, "We hope this project delivers a tangible multiplier effect for all stakeholders, creating job opportunities, driving growth in supporting industries, and boosting regional economic activity."

Project implementation has entered the engineering phase through the preparation of a Front-End Engineering Design (FEED) alongside international contracting partners. Management targets full construction completion and commercial operation by 2029.