Indonesia’s PT Pertagas Niaga (PTGN) and Malaysia-based renewable energy developer Renikola have signed a 15-year biomethane offtake agreement, advancing plans to establish what the companies describe as the country’s first biomethane-to-gas-grid ecosystem.
Signed through Renikola’s Indonesian subsidiary PT reNIKOLA Primer Energi (PTRPE), the agreement covers compressed biomethane gas produced from eight palm oil mills owned by PT Perkebunan Nusantara IV in North Sumatra.
The project is expected to produce more than 830,000 million British thermal units of biomethane annually and is backed by an investment of around $40m.
Under the agreement, PTGN, a subsidiary of PT Pertamina Gas, will act as the long-term offtaker, supplying the renewable gas to industrial customers through Indonesia’s existing natural gas network.
Pertagas will also develop what is expected to be Indonesia’s first dedicated biomethane injection station near the Sei Mangkei Special Economic Zone, linking biomethane production sites to the national gas grid.
The project comes as Indonesia looks to unlock a largely untapped biomethane resource from palm oil mill effluent (POME).
According to the Palm Oil Agribusiness Strategic Policy Institute, the country’s palm oil industry generates around 125 million tonnes of POME annually, with the potential to produce 3.6 billion cubic metres of biogas each year. However, only around 15% of that potential is currently utilised.
A palm plantation in Sumatra, Indonesia. The country has the potential to generate around 125 million tons of POME each year as raw material for biogas production ©Shutterstock
The companies said the project will aggregate biomethane from eight palm oil mills into a single supply network, creating what they describe as Indonesia’s largest clustered biomethane development.
The agreement builds on a memorandum of understanding signed by Pertagas and Renikola in to jointly pursue biogas and biomethane projects across Sumatra and Kalimantan.
At the time, the companies said they planned to integrate future biomethane production, purification and distribution infrastructure with Pertagas’ gas pipeline network.
Amran Yusof, CEO and Director of PTRPE, said the agreement establishes a scalable model for renewable gas development in Indonesia.
“By bringing together feedstock suppliers, gas infrastructure providers and long-term market demand, we are establishing a scalable biomethane ecosystem that demonstrates how agricultural waste can be transformed into a reliable source of renewable energy,” he said.
The development is expected to reduce greenhouse gas emissions by around 320,000 tonnes of carbon dioxide equivalent annually by capturing methane from palm oil mill effluent that would otherwise be released into the atmosphere.
Processing POME through methane capture technology can reduce greenhouse gas emissions by an estimated 1,131 tonnes of CO2 equivalent per month at each facility, according to Indonesia’s National Research and Innovation Agency.
