Agreement between Pertamina, Bukit Asam, and Air Products: Coal Gasification Project to Cut LPG Imports, Develop Green Economy, and Bring Investment to Indonesia

Jakarta, May 11, 2021 - PT Pertamina (Persero), PT Bukit Asam Tbk. (PTBA), and Air Products & Chemicals Inc. (APCI) ensures that the coal gasification project to Dimethyl Ether (DME) continues to reduce dependence on imports of Liquid Petroleum Gas (LPG). It is in line with the efforts to achieve energy resilience and strengthen Indonesia's green economy as directed by the President of Indonesia, Joko Widodo.

This National Strategic Project will be carried out in Tanjung Enim for 20 years, bringing in foreign investment from APCI of USD 2.1 billion or the equivalent of IDR 30 trillion. With the utilization of 6 million tons of coal per year, this project can generate 1.4 million DME per year that can reduce LPG imports by 1 million tons per year. Therefore, it will improve the trade balance. In addition, this project is expected to provide a multiplier effect, including attracting other foreign investment. Through the use of the TKDN in the project, it can also empower the national industry by absorbing local labor.

The continuation of the gasification project was marked by the signing of the DME Development Cooperation Agreement Amendment between Pertamina, PTBA, and APCI, which took place in Los Angeles, the United States and Jakarta, Indonesia (11/5/2021) by the President Director of Pertamina, Nicke Widyawati, President Director of PTBA, Suryo Eko Hadianto, and President & CEO of APCI, Seifi Ghasemi, witnessed by Minister of State-Owned Enterprises (SOEs) Erick Thohir. On the same occasion, the DME Processing Agreement was also signed, part of the DME development cooperation.

The Minister of SOEs, Erick Thohir, welcomed this cooperation: "This (cooperation) is a manifestation of the close economic relationship between Indonesia and the United States. Coal gasification has a direct added value to the national economy at a macro level, because it is in line with President Joko Widodo's direction to reduce dependence on imported products, as well as transformation to a green economy as well as new and renewable energy. Coal gasification cooperation can save foreign exchange reserves of up to 9.7 trillion rupiah per year and absorb 10 thousand workers. "

Likewise, President Director of Pertamina, Nicke Widyawati, said that it aligns with the President's direction through the Grand National Energy Strategy: energy transition, green energy, and circular energy are priorities. "Pertamina as a state-owned enterprise has reformulated a strategy that is in line with the direction of the Government in achieving the target of no LPG imports by 2027 and reducing carbon emissions by 2030," said Nicke.

In addition, Nicke said Pertamina also understands that DME development and production are related to environmental issues. Therefore, according to the direction of the Government, Pertamina will run the DME project in parallel with the Carbon Capture Utilization and Storage (CCUS) project. Therefore, the issue of carbon emissions can be reduced by up to 45%. On the same occasion, Pertamina also explored the potential for cooperation with ExxonMobil regarding CCUS. It is hoped that through the application of CCUS, the emissions generated from the gasification process can be used to increase production in old wells, thereby encouraging the realization of a green economy for similar projects.

President Director of PT Bukit Asam Tbk (PTBA), Suryo Eko Hadianto, added that the parties involved in the signing today would work hard to realize the project development immediately. "We believe the signing today is a significant leap in the development of project cooperation, and we are optimistic that this project can be executed on time," he said.

PTBA also emphasized that this collaboration will become a new portfolio for companies that no longer only sell coal but also enter into downstream products to increase added value.**

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