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Jakarta Post
The Jakarta Post
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Govt forces Shell, Total to boost biodiesel mix

  • Amahl S. Azwar

    The Jakarta Post

Jakarta | Mon, September 23, 2013 | 10:01 am

PT Shell Indonesia and PT Total Oil Indonesia will have to increase the proportion of biodiesel in the diesel fuel mix they sell at their gas stations to at least 10 percent by January next year or leave the business.

Shell and Total, the only two remaining foreign players in the downstream petroleum sector in Indonesia, were obligated to boost the fatty acid methyl ester (FAME) content in their diesel mixes, said Energy and Mineral Resources Ministry director general for renewable energy and energy conservation Rida Mulyana.

'€œWe will inspect [their] gas stations from time to time to ensure they follow the new regulation,'€ he said over the weekend, referring to the 2013 Energy and Mineral Resources Ministerial regulation issued on Sept. 1 mandating the change.

The regulation also requires a minimum of 10 percent biodiesel in diesel fuel mixes used for industrial and commercial purposes, and a minimum of 20 percent for those used in power plants.

The regulation also stipulates a minimum amount of 1 percent bioethanol in gasoline used in non-public service transportation vehicles, as well as in industries and commercial businesses, by January next year.

The new regulation, which was passed as part of the government'€™s stimulus package aimed at pushing down fuel imports to combat the current-account deficit and weakening rupiah, replaces a previous regulation issued in 2008 and makes the fuel-blending requirement mandatory instead of voluntarily.

Fuel retailers failing to comply with the regulation may face sanctions ranging from suspension of operations to business license revocation.

Both Shell '€” a subsidiary of petroleum giant Royal Dutch Shell '€” and Total '€” a subsidiary of France-based Total SA '€” currently only mix 1 percent of biodiesel into their diesel fuel, according to Rida.

They previously were required to have at least 3 percent biodiesel in their diesel fuel mix.

Indonesia, Southeast Asia'€™s biggest economy, now imports around 35 million kiloliters of diesel fuel per year, including 17.5 million kiloliters of subsidized diesel fuel.

Indonesia'€™s state-owned oil and gas corporation PT Pertamina dominates the market in petroleum product sales in Indonesia with a 97.3 percent market share, followed by Shell (2.4 percent) and Total (0.11 percent), according to Energy and Mineral Resources Ministry data.

Shell Indonesia spokesperson Inggita Notosusanto said the firm now had 2 percent biodiesel in its diesel fuel and would start selling 10 percent biodiesel in January next year.

She, however, highlighted the need for carmakers to give assurances that their products were compatible with a 10 percent biodiesel mix.

'€œWill people buy [the 10 percent biodiesel diesel fuel] if there'€™s no warranty on their engine?'€ she said.

Meanwhile, Total Indonesia said in an email response to The Jakarta Post'€™s queries that the firm now sold diesel fuel with 2 percent biodiesel and was ready to support the government'€™s new policy.