Blenders Adjust to Indonesias B20 Mandate

Indonesias mandatory use of B20 biodiesel fuel may lead to an increase in biodiesel fuel vehicles in Southeast Asia, encouraging lubricant blenders to gradually expand their product ranges.

Based on the Ministry of Energy and Mineral Resources Decree No. 12/2015, by Sept. 1 this year all sectors using diesel fuel had to massively implement the usage of B20 diesel fuel, said Ilman Hizbullah Hasibuan, consulting manager at Ipsos Business Consulting Indonesia. Exceptions include military equipment and power generators that are not B20-ready and mines in high altitude to avoid solidification of the fuel.

Photo: Sallehudin Ahmad/Shutterstock

A Pertamina gas pump in Medan, Indonesia. Biosolar is a trade name for biodiesel fuel. The country has mandated that locally sold diesel fuel have a bio-component of 20 percent.

This means locally sold diesel has to have a bio-component of 20 percent. Failure to comply will lead to fines of U.S. 41 cents per liter based on the companys diesel fuel quota, and after three warnings, the license of fuel companies may be revoked.

Major lubricant blenders in Indonesia - like Pertamina, Shell, Federal Oil and Idemitsu Kosan - told Lube Report their lubricants comply with B20 applications for heavy duty and passenger vehicles. However, small- to medium-sizedblenders may not be ready.

We see some smaller blenders are just starting to develop their B20 lubricant. They tend to wait and test the water first instead of staying in front of the market like the major blenders, said Ilman.

If one has to start with proper formulation it would take some time, as it requires testing, after-use analysis, fine tuning, etc., said Patrick Adhiatmadja, president director of PT Federal Karyatama, a subsidiary of ExxonMobil.

Cost is another consideration blenders have to consider. Apart from development cost, as it would be a new and different line of product, then another whole cycle of applying for SNI certification would be required, added IIman. SNI is the Indonesian standard for lubricants.

These small and medium blenders tend to serve some niche, so its important for them to understand the preference of that niche, he said.

Major crude palm oil-producing countries like Malaysia may also see an increase in biodiesel fuels. Malaysia is using B10, but receive continuous push and support from Indonesia to move into B20, while Thailand recently issued a new tax scheme to encourage the use of B20, effectively reducing the B20 fuel price, he added.