Govt pushes methanol industry expansion as B50 requires 2.5 mln tpy supply
Friday, July 10 2026 - 07:07 AM WIB
By Calvin Purba
As part of efforts to meet methanol demand for the newly launched mandatory B50 biodiesel program, the Indonesian government plans to accelerate the development of methanol plants in East Java and East Kalimantan.
Bahlil Lahadalia, Minister of Energy and Mineral Resources (MEMR), said the B50 program will require around 2.5 million tonnes of methanol annually, while Indonesia's current domestic production stands at only about 660,000 tonnes per year. Methanol is a key feedstock in biodiesel production.
"With the implementation of B50, methanol demand will increase. We need around 2.5 million tonnes of methanol annually just for the B50 program. Therefore, the next step is to encourage the immediate development of the domestic methanol industry," Bahlil said on the sidelines of the B50 launch ceremony on Thursday.
One of the projects scheduled to begin construction this month is a gas-based methanol plant in Bojonegoro, East Java. The government is also preparing to develop a coal-based methanol plant in East Kalimantan.
"One project is in East Java, where we will conduct the groundbreaking this month. Another is in East Kalimantan as part of our coal downstreaming program," Bahlil said.
As previously reported by Petromindo, PT Butonas Petrochemical Indonesia (BPI) plans to invest US$1 billion in a new methanol plant in Bojonegoro, East Java, with an annual production capacity of one million tonnes, according to BPI President Director Ignatius Talulembang, as quoted by Sinochem News
The plant is scheduled to begin commercial operations in 2029 and is intended to help meet rising domestic methanol demand while supporting Indonesia's energy transition. It has been designated as one of the government's 77 National Strategic Projects (PSN) for the 2025–2029 period.
Operations are expected to commence alongside the implementation of Indonesia's B40 and B50 biodiesel blending mandates.
"Methanol is a key feedstock for biodiesel production, and demand is expected to increase significantly as Indonesia expands its renewable fuels program," Ignatius said.
Editing by Reiner Simanjuntak