10 Mar 2021

Indonesia LPG Imports to Fall Sharply by 2025 as Coal Gasification Ramps up

10 Mar 2021  by Reuters   

Indonesia's imports of liquefied petroleum gas (LPG) are expected to decline by six times in 2025 from current numbers, as the country seeks to ramp up its coal gasification efforts, a top energy ministry official said on Tuesday.

The country's LPG imports would decline from 6.1 million tonnes in 2020 to just 1 million tonnes in 2025, Sujatmiko, the ministry's director of coal, told a virtual conference.

By 2030, Indonesia is projected to stop importing LPG altogether.

"Our LPG needs are ever increasing, 75 per cent to 78 per cent of our LPG consumption in the country is fulfilled by imports," said Sujatmiko, who goes by one name.

The world's top exporter of thermal coal has long promised to cut LPG imports while optimising use of domestic coal assets, and creating jobs in a downstream coal industry.

Under a new presidential regulation last month, coal gasification features on a "priority" investment list, which offers incentives such as tax allowances or tax breaks.

Indonesia is expected to produce 4.56 million tonnes on dimethyl ether (DME), the LPG substitute derived from coal, in 2025, Sujatmiko said. This will increase to 6.89 million tonnes in 2030.

Industry experts, however, said last year that unless the production of DME is subsidised, the government should look at other ways to cut consumption of LPG.

Despite zero royalties and other benefits to invest in Indonesian coal downstream projects, experts say investment will be hard to come by given global banks' aversion to coal financing.

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