A coal-to-methanol conversion project led by PT Bumi Etam Chemical in East Kutai, East Kalimantan, Indonesia, has entered a Front-End Engineering Design (FEED) phase following the signing of a FEED contract and an EPCC (Engineering, Procurement, Construction and Commissioning) framework agreement, it is reported. The total investment is reported at approximately US$2.3 billion.
It is reported that the project is being developed by PT Bumi Etam Chemical, a joint venture between PT Arutmin Indonesia and PT Kaltim Prima Coal, both subsidiaries of Indonesian coal company Bumi Resources. The FEED contract and EPCC framework agreement were signed in Jakarta on July 29, with construction to be carried out by Indonesia’s PT Istana Karang Laut (IKL) and China National Chemical Engineering Co., Ltd. (CNCEC), it is reported. The project will convert low-calorie coal into methanol via a coal gasification process; the original reports do not name a specific licensor for the gasification technology, so this remains unconfirmed. Bumi Resources is one of Indonesia’s largest coal producers, and this project is reported to be part of its effort to expand from a coal-export-focused business model into downstream chemical industries.
It is reported that the project is part of the Indonesian government’s coal downstreaming policy, aimed at converting raw coal into higher-value chemical products domestically rather than exporting it as a raw commodity. It is reported that Indonesia has continued to pursue a broader resource downstreaming policy, restricting raw material exports and fostering domestic processing and refining industries across sectors including coal and nickel.
Implications for Korea’s Industry
With Chinese EPC firms continuing to participate in coal downstreaming projects across Southeast Asia, it is worth noting the competitive landscape for Korean construction and engineering firms pursuing chemical plant contracts in the same markets.
The timing of the formal EPCC contract following FEED completion, and whether the contract value will be disclosed, are reported to be worth watching.