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Long road ahead for Indonesia’s jet fuel industry
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An airplane of flag carrier Garuda Indonesia lands on Feb. 21, 2024, at Sultan Iskandar Muda International Airport in Blang Bintang, Banda Aceh, Aceh. Garuda and Pertamina have successfully tested Bioavtur J2.4 sustainable aviation fuel for commercial flights. (AFP/Chaideer Mahyuddin)
T
he government is inviting private oil and gas companies to produce aviation turbine fuel (avtur) as it seeks to bring down airfares, but experts say Indonesia lacks a competitive advantage in the industry, making it unattractive for investment.
Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan said Indonesia had to invite aviation fuel producers other than state-owned oil and gas firm Pertamina to produce cheaper avtur and thereby allow for lower airline ticket prices in the country.
However, investment in refineries to process crude oil is costly, not to mention the fact that Indonesia remains reliant on imports of crude oil, Moshe Rizal, who heads the investment committee of the Association of Oil and Gas Companies (Aspermigas) told The Jakarta Post on Thursday.
Moreover, oil refineries do not produce avtur exclusively, but also make other types of fuel depending on market demand.
“No one wants to build a refinery without securing demand, this is a multibillion-dollar investment. Investors must know which airline companies are willing to buy the product first,” he said, adding that it “makes more sense” to focus on developing sustainable aviation fuel (SAF) production instead, given Indonesia’s position as the world’s largest crude palm oil (CPO) producer.
After a press conference held on Monday at the Bali International Air Show (BIAS), Luhut said the government was welcoming private companies to invest in aircraft refueling depot (DPPU) projects, especially those located in eastern regions of the country.
He went on to say that Indonesia had to leverage its strategic geographical conditions to develop the air transportation sector and accelerate economic growth, citing the International Air Transport Association’s (IATA) projection that Indonesia will become the world’s fourth-largest aviation market in 2037.
