Indonesia's Strategic Coal Downstreaming Initiative to Enhance Energy Security

State-Owned Enterprises Collaboration

PT Pertamina (Persero) and MIND ID, Indonesia's state-owned enterprises, have entered into a significant strategic partnership to accelerate the downstreaming of coal into alternative energy products. This collaboration was formalized through a Memorandum of Understanding signed on January 9, 2026 ¹

Key Objectives and Products

The partnership focuses on converting coal into various alternative energy sources including Dimethyl Ether (DME), Synthetic Natural Gas (SNG), and methanol. These products are designed to substitute LPG imports, addressing the significant gap between national LPG consumption and domestic production ²

Addressing LPG Shortfall

Indonesia faces a substantial LPG deficit, with projected consumption reaching 10 million metric tons in 2026 while domestic production remains limited to 1.3-1.4 million metric tons. The coal downstreaming initiative is a strategic response to this challenge, leveraging the country's coal resources to enhance energy security ¹

Roles and Responsibilities

In this collaboration, MIND ID will oversee the upstream operations through its subsidiary PT Bukit Asam (PTBA), which will act as the coal supplier. Pertamina, with its extensive distribution network, will serve as the offtaker and infrastructure aggregator, ensuring the effective distribution of the alternative energy products to consumers and industries ³

Economic and Strategic Implications

The partnership represents a significant step towards achieving Indonesia's energy self-sufficiency goals. By reducing dependence on LPG imports, the initiative is expected to provide economic benefits, create new employment opportunities, and strengthen national energy security. The project aligns with the government's vision of enhancing the value chain of mineral and coal resources through downstreaming activities ²

Industry Impact

The successful implementation of this coal downstreaming project will not only address the immediate LPG shortage but also contribute to the long-term sustainability of Indonesia's energy sector. It demonstrates the government's commitment to leveraging technology and state-owned enterprises to drive industrial development and energy security ¹