Indonesia's 2009 palm oil biodiesel use seen

Posted by Palm Oil HQ
Source: http://news.alibaba.com

Added 1 day 3 hours ago - JAKARTA, Oct 8 - Indonesia may consume 1 million to 1.2 million tonnes of biodiesel using palm oil as feed stock in 2009, following the introduction of a mandatory biofuel policy, a government official said on Wednesday.

The resource-rich nation has been pushing for the use of biofuels to cut the use of costly petroleum products and to help ensure the survival of its fledgling biodiesel industry.

Last month, the government issued a ministerial decree that makes the use of biofuel mandatory from 2009. [ID:nJAK127091]

"That will need crude palm oil supply of about 1.2 to 1.5 million tonnes," Bayu Krisnamurthi, deputy to the chief economic minister, told reporters. He said biodiesel use in 2010 may double the amount consumed in 2009 due to the increase in the mandatory blend.

Krisnamurthi also said the biodiesel use may reduce the portion of the country's palm oil production destined for export, starting from next year.

Indonesia's combined capacity for biofuel using palm oil as a feedstock is 2 million kilolitres per year, but it is running at 20 percent of capacity, data from the national biofuel development team shows.

For biodiesel, the decree states the transport sector must use a blend of 1 percent palm-based biodiesel and 99 percent diesel oil, while industry and power plants must use a blend of 2.5 percent and 0.25 percent palm-based biodiesel respectively.

For bioethanol, the use of a 1-5 percent blend of bioethanol and 99-95 percent of gasoline for transportation will become mandatory in 2009.

Industry will have to use a 5 percent blend of bioethanol -- which is made from cane molasses and cassava feedstock -- and 95 percent gasoline next year, increasing to 7 percent by 2010.

With the introduction of the mandatory policy, biodiesel capacity would rise to 5 million kilolitres a year by 2010, the government said recently, although it could also push up the price of palm oil.

Palm oil futures have tumbled around 40 percent since the start of the year, and have fallen more than half since hitting a record high of 4,486 ringgit a tonne in March.

Indonesia produced 17.18 million tonnes of crude palm oil in 2007, of which 3.8 million tonnes was used in the domestic market, mostly for food. Production this year is expected to rise to 18.6 million tonnes.

The grain and oilseed-based biofuel sector has come under attack from green groups for accelerating the destruction of forests, while some analysts blame it for contributing to soaring world food prices by diverting crops that could be used for food, but biofuel industry officials deny this.




Indonesia biofuel policy to reduce palm oil exports

Posted by Palm Oil HQ
Source: http://www.business-standard.com

Added 1 day 10 hours ago
Exports of palm oil from Indonesia, the largest producer, may decline by as much as 1.5 million metric tonnes a year after the nation made the use of renewable energy mandatory, a government official said.

“In relation to the mandatory policy for bio-energy issued last month, we see that the use of agricultural products for alternative energy will increase,” Bayu Krisnamurthi, a deputy to Coordinating Minister for Economic Affairs Boediono, said on Wednesday in Jakarta. “This will cut our exports” of palm oil.

A fall in supplies from Indonesia, the top producer of the tropical oil, may help support prices that slumped to a two-year low this week on concern slowing global economic growth will dent demand for commodities.

The mandate is “positive for the week” for palm oil prices, said Tan Ting Min, a plantation analyst at Credit Suisse Group in Kuala Lumpur.

Indonesia said September 26 diesel used for transportation must have minimum 1 per cent biodiesel starting this month. The mix was set at 2.5 per cent for industrial users. The nation also mandated 1 per cent bio-ethanol mix for cars using subsidised fuel starting 2009, while industries using gasoline must ensure 5 per cent of the fuel has bioethanol.

Fossil Fuels: Palm oil, with the highest calorific value of any vegetable oil, can be added to diesel to stretch supplies of fossil fuels. Brazil mandates the use of ethanol, made from sugar cane, in cars while the US uses corn to make ethanol.

Indonesia’s biofuel industry can produce between 1.3 million tonnes to 1.5 million tonnes annually, said Krisnamurthi. Capacity may double to 3 million tonnes by 2010, he said.

The country’s palm oil output will be more than 19 million tonnes next year and exceed 20 million in 2010, he added. Food and chemicals industry may use 4.5 million tonnes this year and next, and 5 million tonnes in 2010, Krisnamurthi said.

Palm oil for December delivery is trading at 1,819 ringgit ($520) a ton on the Malaysia Derivatives Exchange at 4:14 pm local time. Prices have dived 60 per cent from a peak in March.

Futures may average 2,900 ringgit a tonne in 2009, compared with 3,226 ringgit so far this year, Credit Suisse’s Tan said.