Pertamina ready to raise biofuel content next year

State owned oil and gas firm PT Pertamina (Persero) said on Tuesday is ready to raise the content of biofuel in its diesel oil to 20 percent next year from 15 percent this year in line with the ministerial regulation.

Thanks to the increase in the biofuel content, the firm projects its demand for Fatty Acid Methyl Ester (FAME), the main raw material for the making of biodiesel, will reach 4.8 million kiloliters, which is equal to 24 kl of biodiesel.

The government has issued several regulations over the past several years to promote the use of biofuel in order to reduce the consumption of oil fuels. Among them is Minister of Energy and Mineral Resources (MEMR) Regulation No. 20/2014, which states that biofuel content in diesel oil distributed by Pertamina in the transportation sector should reach 15 percent this year. The rule is called Mandatory B-15. Next year, the biofuel content should reach 20 percent. The rule is called Mandatory B-20.

Last year, the total volume of FAME supplied to Pertamina reached 1.5 million kl, which is equal to 13.4 million kl of biodiesel, according to Pertamina?s Marketing Director Ahmad Bambang.

He said Pertamina referred to the GasOIl Market Price Index, based on a government-set formula, in paying FAME producers for their products. As a result of the drop in crude oil price, Pertamina?s purchasing price of FAME has turned lower than the real FAME Market Price Index. This has become an obstacle for Pertamina in implementing Mandatory B-15 this year.

?Presidential Regulation No. 61/2015 mandates the establishment of the Agency for the Management of Palm Oil Plantation Fund (BPDP Sawit) which is tasked with covering the discrepancy between Pertamina?s purchasing price and FAME Market Price Index. The new regulation has become the best solution beneficial to all parties. This is evidenced in the fact that FAME supplies from producers are running smoothly at present,? Achmad said.

Achmad said with Mandatory B-15 rule being implemented, Pertamina projects that it will be able to distribute a total of 830,000 kl of FAME, equal to 5.5 kl of biosolar through the end of the year. The FAME will be distributed to 31 main cities of the country.

?For the period of 2016, FAME suppliers will be selected by a join team formed by the government, comprising the Directorate General of New Renewable Energy and Energy Conservation (EBTKE), oil fuel companies, BPDP Sawit. The selection will be carried out through tender, which is open to firms registered with EBTKE,? he said.

Editing by Johannes Simbolon