Indonesia partners with US firm to revive coal-to-DME project

Indonesia's efforts to revive its coal downstreaming project have taken a new turn with the partnership between Badan Pengelola Investasi (BPI) Danantara Indonesia and U.S. energy company Latitude Energy Holdings Inc. The collaboration aims to develop a coal gasification project, converting coal into dimethyl ether (DME), a potential substitute for liquefied petroleum gas (LPG).

Latitude Energy will explore the project's development using Transport Integrated Gasification (TRIG) technology, which is claimed to transform coal into synthetic gas that can be processed into various products, including DME. Sigit P. Santosa, CEO of PT Danantara Development Management Fund, stated that the partnership aligns with the government's strategy to strengthen energy resilience through the utilization of low-calorie coal. He emphasized Indonesia's vast potential to optimize its coal resources with advanced conversion technology to meet domestic energy needs.

Latitude Energy is set to provide technical, management, and investment support for building a large-scale coal gasification platform. Joy M. Sakurai, Chargé d'Affaires ad interim of the U.S. Embassy in Jakarta, noted that U.S. energy technology could bolster Indonesia's energy security and industrial development while strengthening bilateral investment ties.

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As one of the largest coal producers in the world, Indonesia has great potential to optimize its coal resources through advanced conversion technology that can support domestic energy needs.

This partnership marks a significant step following the government's decision in March 2025 to revive the DME project. Previously, the project, initially conceived in 2018 through a collaboration involving PT Bukit Asam Tbk, PT Pertamina (Persero), and U.S.-based Air Products and Chemicals Inc., faced setbacks when Air Products withdrew in 2023. The project, valued at approximately $15 billion, was intended to produce 1.4 million tons of DME annually to reduce LPG imports.

Despite the renewed push, concerns about the cost-competitiveness of coal-based DME persist. Fabby Tumiwa, Executive Director of the Institute for Essential Services Reform (IESR), previously indicated that for DME to be competitive with LPG, the price of coal would need to be around $15-20 per ton. The current production costs remain a significant hurdle.

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U.S. energy technology has the potential to support Indonesia's energy security and industrial development while strengthening the investment relationship between the two countries.