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Sunday, 30 January 22
AIR PRODUCTS' COAL GASIFICATION PROPOSAL TRIGGERS LOOMING POLICY DISPUTES IN INDONESIA - IEEFA
 Plan to substitute Indonesia’s LPG imports with dimethyl ether may be hard to realize due to conflicting business interests
Indonesia): Air Products & Chemicals and the Indonesian government’s deal on coal gasification projects has triggered a looming policy conflict because it may be impossible to meet the business interests of all parties, according to a report by the Institute for Energy Economics and Financial Analysis (IEEFA).
Air Products, a U.S.-based industrial gas company, recently signed additional memoranda of understandings reportedly worth US$15 billion for coal gasification projects in Indonesia. Two of the gasification plants would be used to create dimethyl ether (DME) as a substitute for Indonesia’s domestic liquefied petroleum gas (LPG) imports.
“Many optimistic statements have been made about Air Products’ downstream coal plan in Indonesia,” says Ghee Peh, an IEEFA energy analyst and the report’s author. “But it may be hard for all of the parties involved to realize their dreams.”
The report focuses on a previously announced $2.1 billion project to build a DME plant in Sumatra (which was the subject of a November 2020 IEEFA report). All parties—coal supplier Tambang Batubara Bukit Asam (PTBA), DME plant operator Air Products, and DME offtaker Pertamina—are unlikely to achieve their objectives at the same time. It would require a scenario that includes reduced stranded asset risks, low-risk fixed returns to pay for the DME plant, and selling DME for a profit.
Air Products’ business model is to cut out commodity price risks, effectively insulating returns. PTBA’s DME project could make this low-risk business model difficult to implement, and the conflict could be passed on to the off-taker, Pertamina.
A higher DME purchase price would mean a government subsidy for Pertamina so that the DME can be sold at an affordable price for Indonesian households.
Further compounding the economic unviability of the proposed projects is the difficulty in calculating DME prices, because coal, LPG and oil prices all move in the same direction.
“Over the last 20 years, the DME price has been cheaper than LPG for 15 months, or about 6% of the period, on an ‘apples to apples’ basis,” says Peh.
IEEFA’s report suggests that a government subsidy similar to the current LPG subsidy from Indonesia’s Ministry of Finance is necessary for DME because of its high production cost of US$601/tonne, which includes a 15% DME production margin for Air Products.
“From the government’s point of view, the savings only work when the LPG price is above a certain level—about US$858/tonne,” says Peh. “Since this has only happened for 6% of the last 20 years, the DME project in its current form would not be able to justify any savings, nor would it be able to satisfy all four stakeholders at once.”
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Wednesday, 26 January 22
MARKET INSIGHT - INTERMODAL
While it is logical that most of the S&P reports of the first weeks of the year are linked to very limited activity as reflected in the weekly ...
Wednesday, 26 January 22
INDONESIA: DME PROJECT IS ECONOMICALLY VIABLE AS STUDY DEMONSTRATES
The government is encouraging downstream coal processing or increase in coal added value, for example by turning coal into Dimethyl Ether (DME) to ...
Wednesday, 26 January 22
COMMODITY PRICES COULD SOAR IF THE RUSSIA-UKRAINE CRISIS ESCALATES - ING
It appears that a number of commodity markets are starting to at least price in some geopolitical risk around the growing tension between Russia an ...
Wednesday, 26 January 22
INDONESIA'S COAL BAN SENDS PRICES SOARING, OTHER EXPORTERS FAIL TO STEP UP - REUTERS
Indonesia’s short-lived ban on exporting coal has sent ructions through the seaborne market for the fuel in Asia, with the fallout likely to ...
Friday, 21 January 22
CHINA'S POWER TRADING TARIFFS TO RISE IN 2022 - FITCH RATINGS
Rising trading volume and higher-than-benchmark tariffs in the 2022 bilateral contracts signed between Chinese power generation companies (gencos) ...
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- Rio Tinto Coal - Australia
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- Mjunction Services Limited - India
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- Larsen & Toubro Limited - India
- CNBM International Corporation - China
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- Ministry of Transport, Egypt
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- Toyota Tsusho Corporation, Japan
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- TNB Fuel Sdn Bhd - Malaysia
- Petron Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- The University of Queensland
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- GN Power Mariveles Coal Plant, Philippines
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- Eastern Energy - Thailand
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- Miang Besar Coal Terminal - Indonesia
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- Indika Energy - Indonesia
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- Bhushan Steel Limited - India
- Indo Tambangraya Megah - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Indonesian Coal Mining Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aditya Birla Group - India
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- Power Finance Corporation Ltd., India
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- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
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- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- Neyveli Lignite Corporation Ltd, - India
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- Edison Trading Spa - Italy
- Economic Council, Georgia
- Directorate General of MIneral and Coal - Indonesia
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- Sojitz Corporation - Japan
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- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Energy Link Ltd, New Zealand
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- Mintek Dendrill Indonesia
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CIMB Investment Bank - Malaysia
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
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- Malabar Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Intertek Mineral Services - Indonesia
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- Jaiprakash Power Ventures ltd
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- OPG Power Generation Pvt Ltd - India
- Makarim & Taira - Indonesia
- Sree Jayajothi Cements Limited - India
- India Bulls Power Limited - India
- Bhoruka Overseas - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Krishnapatnam Port Company Ltd. - India
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- GAC Shipping (India) Pvt Ltd
- Kumho Petrochemical, South Korea
- International Coal Ventures Pvt Ltd - India
- SMG Consultants - Indonesia
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Medco Energi Mining Internasional
- The Treasury - Australian Government
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- MS Steel International - UAE
- Posco Energy - South Korea
- Pendopo Energi Batubara - Indonesia
- Therma Luzon, Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- South Luzon Thermal Energy Corporation
- Mercator Lines Limited - India
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
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- Indian Energy Exchange, India
- Australian Coal Association
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- White Energy Company Limited
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- Tata Chemicals Ltd - India
- Orica Mining Services - Indonesia
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Goldman Sachs - Singapore
- Bukit Baiduri Energy - Indonesia
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