Pertamina targets to absorb 5.14 kl of FAME next year

State owned oil and gas firm PT Pertamina (Persero) now targets to absorb 5.14 million kiloliters of Fatty Acid Methyl Ester (FAME), also known as biodiesel, next year.

This is in line with the government?s regulation which increase the mandatory level of biodiesel mixture in diesel to be sold for public service obligation (PSO) and power generation. The mandatory level of biodiesel mixture for PSO ? a local term referring to diesel sold for transportation at subsidized price ? will increase to 20 percent from 20 percent next year from 15 percent this year, while the mandatory level for power industry will rise to 30 percent from 25 percent.

If the target is realized, Pertamina will be able to save its dollar spending by US$1.94 billion on the price assumption of around $60 per barrel, Vice President for Corporate Communication Wianda Pusponegoro said in a statement on Monday.

In Indonesia, FAME is mostly derived from palm oil, which Indonesian has in abundance. The obligation to mix biodiesel with diesel was introduced by the government several years ago to cut Pertamina?s imports of diesel and thereby to save the country?s foreign exchange earnings.

On Sept. 8, Pertamina?s Marketing Director Achmad Bambang said the firm targeted to absorb 4.8 million kl of FAME next year. But, Wianda said the target has been revised to 5.14 million kl.

Achmad further said Pertamina targeted to distribute a total of 830,000 kl of FAME through the end of the year. However, according to Wianda, the target has been revised upwards to 966.785 kl.

Assuming gasoil price at $60 per barrel, the absorption of FAME will allow Pertamina to cut its dollar spending by $360 million, she said.

Editing by Johannes Simbolon