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Indonesia bets big on biodiesel to limit costs of oil imports

August 09/2018

MOSCOW (MRC) - Indonesia plans to require all diesel fuel used in the country contain biodiesel starting next month to boost palm oil consumption, slash fuel imports, and narrow a yawning current account gap, as per Hydrocarbonprocessing.

While the proposal has been welcomed by the palm oil industry and government, it has raised concerns among the automobile industry the fuel could impact engine performance.

Environmentalists fear the boost to local palm oil consumption will hasten Indonesia's already fast spreading deforestation.

The following explains some of the issues surrounding the drive to increase biodiesel usage.

Indonesia currently imports around 400,000 barrels per day of crude oil and a roughly similar amount of refined products, which makes Southeast Asia's largest economy vulnerable to the sort of increases in global crude prices seen over the past year.

With the current account deficit estimated to grow by USD8 billion in 2018, the plan is to cut diesel imports by mandating that all diesel consumers, including power plants and railways, use biodiesel that contains 20 percent bio-content (B20), typically palm oil. Officials estimate this will save Indonesia around USD6 billion per year.

The programme will increase domestic consumption of palm oil in the world's largest producer of the edible oil, providing a market for output that has climbed by 35 percent over the past five years.

In Indonesia, the biocomponent in biodiesel consists of fatty acid methyl esters (FAME) made from palm oil.

Indonesia has 26 FAME producers, including units of palm oil giants like Sinar Mas Group, Wilmar, and Musim Mas, according to the Indonesian Biofuels Producers Association (APROBI). FAME is supplied to fuel distributors including Pertamina, blended with petroleum-based diesel and sold to end-users.

Currently, only around one-quarter of Indonesia's FAME production capacity is utilized, and the new programme could raise this to up to 50 percent, said Togar Sitanggang, a senior official at the Indonesia Palm Oil Association (GAPKI).

The government has said it will provide incentives to biodiesel producers but has not provided details.


mrcplast.com
Author:Anna Larionova
Tags:petroleum products, petrochemistry, Crude oil, Indonesia.
Category:General News
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