A fifteen year offtake turns palm mill effluent into grid delivered gas for industry

PT reNIKOLA Primer Energi and PT Pertagas Niaga signed a fifteen year compressed biomethane gas sales agreement on 19 August 2026, establishing the commercial base for what both parties describe as Indonesia's first biomethane ecosystem connected to the national gas grid. The gas will come from palm oil mill effluent at eight mills owned by PT Perkebunan Nusantara IV in North Sumatra.

The structure is worth setting out plainly. PT reNIKOLA Primer Energi, known as PT RPE, is the Indonesian subsidiary of the Malaysian renewable energy developer reNIKOLA Holdings Sdn Bhd, and it produces the gas. PT Pertagas Niaga, a subsidiary of PT Pertamina Gas, buys it for fifteen years and distributes it to industrial customers. PTPN IV supplies the feedstock from mills it already operates. Investment in the eight facility cluster is put at USD 40 million, and full capacity output is expected to exceed 830,000 MMBtu a year.

Why the injection station is the decisive piece

The element that distinguishes this project from earlier biogas work is infrastructure rather than chemistry. Pertagas will build Indonesia's first dedicated biomethane injection station near the Sei Mangkei Special Economic Zone. That station is the connection point between production and the existing natural gas distribution network.

The consequence is that renewable gas reaches industrial consumers without anyone building a parallel distribution system. Biogas projects at palm mills have historically been captive, serving the mill itself or a nearby load, with surplus limited by the absence of a route to market. An injection point converts a set of isolated installations into supply that any connected industrial customer can buy.

By bringing together feedstock suppliers, gas infrastructure providers and long term market demand, we are establishing a scalable biomethane ecosystem.

That formulation, from Dr Amran Yusof, Chief Executive Officer and Director of PT RPE, identifies the three parts that have usually been missing together rather than individually. Toto Yulianto, President Director of PT Pertagas Niaga, described the collaboration in similar terms, as creating a pathway for biomethane to be integrated into gas networks that already exist and already reach industry. Jatmiko, President Director of PTPN IV, represents the feedstock side of the arrangement.

The circular logic of palm mill effluent

Palm oil mill effluent, known throughout the sector as POME, is the liquid residue of milling. Left in open ponds it decomposes anaerobically and releases methane, a gas with far greater near term warming effect than carbon dioxide. Capturing that methane and upgrading it to pipeline quality addresses an emission that would otherwise occur and produces a saleable fuel from the same action.

The projected effect is 320,000 tonnes of carbon dioxide equivalent avoided each year. Sources express the same quantity a second way, as the equivalent of not burning about 161 million kilograms of coal annually. Both framings describe one outcome. A residue that was a disposal obligation becomes an energy input, and the emission that came with the disposal does not happen.

This is the circular economy argument in its most testable form. The material was already being produced. The infrastructure to move the product mostly exists. What was missing was a buyer willing to commit for long enough to justify capital, which is precisely what a fifteen year offtake supplies. The development is also expected to create hundreds of jobs in the region.

It is also worth noting that the gas displaces natural gas at the point of industrial use rather than adding supply on top of it. Industrial consumers connected to the Sei Mangkei distribution network receive a molecule of the same specification through the same pipe, so no adjustment is required to combustion equipment on the user side. That characteristic matters for industries tied to thermal processes with narrow tolerances, such as food processing, textiles and chemicals, which have been among the hardest to decarbonise because their process heat does not electrify easily.

From memorandum to binding commitment

The agreement did not arrive without precedent. In June 2025 reNIKOLA and Pertagas signed a memorandum of understanding covering integrated biogas development across Sumatra and Kalimantan, spanning production, purification and distribution, with the stated intention of connecting to the national gas network.

At that stage both parties named the obstacles openly. Securing a stable supply of waste feedstock was one. Managing decentralised waste sources was the other. Gamal Imam Santoso, President Director of Pertagas, said at the time that the partnership could become a model for wider renewable energy work in Indonesia.

The distance between that memorandum and the August 2026 agreement is the distance between intent and bankability. Aggregating eight mills under one supply arrangement is a direct answer to the decentralisation problem. A fifteen year commitment from a Pertamina Gas subsidiary is a direct answer to the offtake problem. The sequence is instructive on its own, because it shows what had to be resolved before capital could commit.

Sirkularium's read for government and public institutions

Three observations follow for policy and implementation.

The first concerns aggregation as a design principle. A single palm oil mill rarely produces enough gas to justify grid connection on its own. Eight mills under one commercial structure do. Indonesia has roughly three thousand palm oil mills, the great majority of them individually too small to matter to a gas network and collectively significant. Policy that encourages clustering, whether through permitting treatment, shared infrastructure planning or connection standards written for aggregated supply, addresses the structural reason this resource has stayed underused.

The second concerns the value of existing infrastructure. The most efficient decarbonisation is frequently the kind that reuses assets already in the ground. A gas network built for fossil supply can carry renewable gas with an injection point and a specification. Public institutions assessing where to direct limited capital should weigh injection and interconnection investments against new build, because the former can make a much larger volume of otherwise stranded supply commercially reachable.

The third concerns contract length as an instrument. The fifteen year term is what converts a technically feasible project into a financeable one. Where public entities are counterparties, whether as offtakers, as landowners or as suppliers of feedstock through state plantations, the duration and credibility of the commitment they offer is among the most powerful tools available to them, and it costs nothing in capital.

What to watch next is the construction timeline for the Sei Mangkei injection station, whether the cluster model is replicated in other plantation provinces including Riau and Kalimantan, and whether the specification and tariff arrangements for injecting renewable gas are codified in a way that later projects can rely on without negotiating each case from the beginning.