JAKARTA, May 5 (Reuters) - Indonesian state coal miner

Bukit Asam is studying a plan to invest $3.1 billion 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 million metric tons of

low-grade coal of around 3,700 kcal/kg GAR into 240 billion

British thermal unit per day (1.6 million metric tons per year),

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.

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 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.