State owned gas distribution company PT Perusahaan Gas Negara (PGN) has partnered with State mining company PT Bukit Asam (PTBA) to develop a Synthetic Natural Gas (SNG) project utilizing coal as feedstock, as part of a broader effort to diversify Indonesia’s energy supply and strengthen national energy resilience.
The initiative will leverage PTBA’s low-rank coal reserves located in Tanjung Enim, South Sumatra − resources that have yet to be optimally monetized. The site’s proximity to PGN’s transmission pipeline network in Pagardewa offers significant infrastructure efficiency and cost-saving potential.
Throughout 2025, the two state-owned enterprises will conduct a feasibility study to assess the development of an SNG production facility, supporting pipeline infrastructure, and potential business models.
“This initiative aligns with the government’s priority on downstream energy development and energy self-sufficiency. If realized, the project has the potential to enhance domestic gas supply and reduce reliance on imports,” PGN Director of Strategy and Business Development, Rosa Permata Sari, said on Monday, April 21, 2025.
SNG is a processed gas derived from coal that mimics the characteristics of natural gas. It can be used both as fuel and industrial feedstock. The output from the project is expected to support PGN’s existing customers, particularly industries in West Java, which are currently facing supply challenges.
“We are actively coordinating with the Ministry of Energy and Mineral Resources (ESDM), Pertamina Oil and Gas Holding, and other stakeholders to ensure that the study is conducted in line with good governance principles,” Rosa cited.
In parallel, PGN has also been pursuing gas supply diversification through a Biomethane project, utilizing Palm Oil Mill Effluent (POME) to produce biogas. Through further processing, the biogas is converted into biomethane, which can be compressed into Compressed Natural Gas (CNG) for distribution to industrial clients, hospitals, hotels, and shopping centers.
PGN is collaborating with a Japanese consortium on the Biomethane project and is currently preparing the Front-End Engineering Design (FEED) for a biomethane plant in Sumatra. The plant, with a projected capacity of 1.2 BBTUD, is targeted to commence commissioning in Q2 2027.
“The Biomethane project is also part of PGN’s commitment to a low-carbon natural gas supply, contributing to carbon emission reduction and supporting Indonesia’s Net Zero Emissions (NZE) goal by 2060,” Rosa concluded.
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