Indonesian state coal miner Bukit Asam is studying a plan to invest $3.1 B into a plant to convert coal into synthetic natural gas, its chief executive said on Monday.

It would be Bukit Asam's latest attempt to produce gas from coal, as the government pushes for domestic value addition on its natural resources, after its partner pulled out from a project to produce dymethyl ether gas.

Bukit Asam plans to convert 8.4 MM tonnes (t) of low-grade coal of around 3,700 kcal/kg GAR into 240 billion British thermal units (BBtu) per day (1.6 metric MMtpy), Arsal Ismail, chief executive of Bukit Asam told members of parliament.

"Some of Bukit Asam's low-grade coal reserves would be very suitable for conversion into synthetic gas," Arsal said, adding the project is aimed at meeting future gas demand in Indonesia.

The company plans to form a joint venture with state-controlled gas distributor Perusahaan Gas Negara (PGN) and a technology provider to build the plant, he said, without naming the technology provider.

Bukit Asam and PGN are currently conducting a feasibility study for the project, including the projected cost of the gas it will produce and its competitiveness against liquefied natural gas (LNG).

Arsal said an initial study indicated that the synthetic gas would be competitive against imported LNG. Indonesia is currently a net exporter of LNG, but some analysts expected that it could turn into a net importer by early 2040s.

Bukit Asam previously partnered with U.S. firm Air Products to convert coal into dimethyl ether, to produce substitution to liquefied petroleum gas (LPG) popularly used as cooking fuel.

Air Products, however, pulled out of the project in 2023 to redeploy its capital in other projects.

Bukit Asam is currently in talks with a number of Chinese companies for potential partnership to replace Air Products, Arsal said.