Coordinating Minister for Economy Darmin Nasution Opened Pertamina Energy Forum 2018 in Jakarta (11/28) - Photo by Pertamina

JAKARTA (TheInsiderStories) – Coordinating Minister for Economic Affairs (CMEA) Darmin Nasution urged state-owned energy producer, PT Pertamina to not be half-hearted in implementing environmental-friendly fuel, B20, mix of 20 percent vegetable oil and 80 percent petroleum diesel.

“We expected Pertamina to be a capstone, or leader in developing B20. We don’t want it when private (company) has complied, but Pertamina is still half-hearted,” said Nasution at the 6th Pertamina Energy Forum in Jakarta today (11/28).

The use of biodiesel 20 percent as required by the government since Sept. 1, 2018 is not yet fully implemented due mainly to distribution problems. The use of B20 is aimed to reduce import of oil fuel, which is seen as the main factor causing the current account deficit (CAD).

The ministry of energy and mineral resource’s (MEMR) Oil and Gas Director General Djoko Siswanto stated after being implemented, it could only be realized up to 80 percent. He added, that in many regions, the oil refueling stations are dependent on ship transportations while procurement of ships is limited.

As a result, the distributions to certain areas, especially islands, will take longer time. To certain areas could take up to 14 days.

According to him, the distribution of fatty acid methyl ester, which is processed from the crude palm oil (CPO) and mixed with the diesel fuel to make the B20, was also hindered by the availability of ships to transport the B20 from its producers to consumers in many areas. He did not give further details of the areas.

“Even in Pertamina, there are still 100 depots that could not yet distribute the B20 due to several problems which include distribution and the measure of B20 content,” added by Siswanto.

The implementation of the B20 is based on the presidential regulation Number 66 Year of 2018 on collection and use of funds from oil palm plantations, and the MEMR regulation Number 41 Year of 2018 on the production, distribution and the use of biodiesel.

Based on the regulations, all oil refueling stations are required to distribute the B20 product as a way to reduce the rising trend of CAD.

Commenting on Nasution’s statement, President Director of Pertamina Nicke Widyawati said, the company its preparedness to produce 100 percent vegetable diesel fuel or so-called B100, through green refinery project in two factories possessed. Recently, Pertamina is preparing its refinery in Dumai, Riau province, for B100 development.

She explained, the use of existing refinery is to optimize assets owned. Moreover, investment value for using existing refinaries will not be as costly as creating new refinery that valued about US$3.5 billion.

“Investment for Dumai refineries development only valued 40 percent compared to new refinery,” said Widyawati by adding the Pertamina’s refineries will produce biodiesel and biofuel, different than the previous production for diesel and fuel.

“So it can be B100, while the conversion period will need 24 months,” she added.

Pertamina had signed an agreement with Italian oil and gas company ENI S.p.A. to cooperate in oil and gas downstream business. The agreement covers potency to develop green refinary, also trade opportunity for oil and gas business and other products.

The green refinery collaboration is in accordance with Pertamina’s commitment to supply B20, mix of 20 percent vegetable oil and 80 percent petroleum diesel, as mandated by government. After B20, government is also optimistic towards B100 implementation.

Recently, Indonesia oil consumption is around 1.6 million barrels per day while domestic production only reached 800,000 barrels per day. So Indonesia must import to cover the shortages. If there is no big investment for new exploration aims to add reserves, Indonesia oil production can be decreasing.

Email: linda.silaen@theinsiderstories.com

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The Insider Stories Founder Linda Silaen has a solid, proven history, established over more than a decade as a journalist with a leading internasional news organization, of being the first with the biggest economic news stories in Indonesia. Specializing in corporate news, Linda is also a veteran of some of the biggest macroeconomic and general news stories as Indonesia rapidly transforms into a major market economy. One of the founders of the original blog from which this company developed, Linda’s knowledge of investors’ information communications and data us developed from unrivaled networking skills that make her a well-known name among CEOs, bankers, government officials and private equity investors both in Indonesia and other countries.

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