Domestic Investors to Build $1.2 Billion Methanol Plant in E. Java

JAKARTA, Investortrust.id – The Indonesian government has announced plans to construct a methanol plant worth $1.2 billion in Bojonegoro, East Java, partnering exclusively with domestic investors.

Minister of Energy and Mineral Resources Bahlil Lahadalia confirmed the initiative during a press briefing in Jakarta on Sunday, Jan. 19, 2025. “This project will be led by the national private sector. The investors are local, with no foreign involvement,” he stated.

 

Indonesia consumes around 2.3 million tons of methanol annually, primarily as a key component in producing B40, a biofuel blend containing 40% biodiesel derived from palm oil. Currently, domestic methanol production falls significantly short, with an output of only 500,000 tons per year.

“Domestic methanol production does not exceed 500,000 tons annually, meaning we have been importing 80% to meet national demand. This is why we are pushing for the construction of a large-scale methanol plant in Bojonegoro,” Bahlil explained.

 

In addition to methanol, the production of B40 requires ethanol, which will be sourced from sugarcane. Ethanol plants are planned for construction in Java and Merauke, Papua, as part of the government’s broader strategy to localize biofuel production.

“The goal is to ensure that the blending process is entirely carried out domestically,” Bahlil added.

 

Beyond its environmental benefits, such as reducing carbon emissions, the B40 initiative is seen as a crucial step toward achieving energy sovereignty. President Prabowo Subianto has expressed his commitment to expanding Indonesia’s biofuel capabilities, envisioning the development of B100—a biofuel blend consisting entirely of palm oil-based biodiesel.

“We are capable of producing B100, which means 100% biodiesel from palm oil. Imagine that—no more diesel imports because we already produce 48 million tons of palm oil annually,” President Prabowo said.