KEPCO-Uhde Pushing Ahead With Indonesia SNG Project

KEPCO-Uhde is pushing forward the Synthetic Natural Gas (SNG) project in Indonesia.

According to the company, before the end of the first half of this year, establishing a local special purpose company (SPC) will be pursued for the SNG plant construction and SNG production in Indonesia.

Once established, the SPC will lead the construction of SNG plant near the bituminous coal mine of Bayan Resources located in Kalimantan, Indonesia. The location of a gasification plant close to coal mine is desirable as it could reduce fuel transportation costs.

The bituminous coal mine of Bayan Resources is the eighth largest coal mine in Indonesia and in 2010, Korea Electric Power Corporation (KEPCO) invested KRW 600 billion to purchase 20% equity of the mine. Last year, KEPCO was able to secure 3 million tons out of 15 million tons of coals produced in Bayan Resources coal mine. If the business plan goes as planned, KEPCO-Uhde will be the first case example of a KEPCO subsidiary which successfully built overseas business by leveraging the synergy with the parent company. KEPCO-Uhde is a joint venture company established between KEPCO and Germany-based ThyssenKrupp Industrial Solutions (Former, Uhde) in July 2011 for IGCC, SNG engineering, licensing and R&D.

KEPCO-Uhde plans to operate SNG plant to produce and supply SNG to local thermal power plants in order to ease power shortage facing Indonesia. As a mid/long-term plan, the liquefaction of SNG by using idle local liquefying facilities near the SNG Plant and the shipment of liquefied SNG to Korea is being considered.

Reported by Jeong-hyung Cho (

SNG is a synthetic natural gas produced from bituminous coals processed under the high-pressure and high-temperature environment using the methanation process. In terms of composition and heating value, SNG is similar to widely used LNG, and can be used for power generation and chemical operations. As SNG can be extracted from low-rank coal, a cheaper and abundant feedstock, the industry anticipates that on top of shale gas, SNG will form one of the key axes in the future gas competition.