Biofuel on the News

Tuesday, January 30, 2007

12 foreign oil firms bid for PLN's oil procurement

The Jakarta Post - January 30, 2007
JAKARTA (JP): Twelve foreign oil companies have placed their bids in a tender held by the state-owned electricity firm (PLN) for the procurement of one million kiloliters (kl) of high speed diesel (HSD) to fire the company's power plants around the country, its chief commissioner says.

Alhilal Hamdi said that the 12 companies would enter the pre-qualification stage in February, so that the oil delivery would come on stream in April.

When asked the name of the companies, Alhilal only mentioned Malaysian oil company Petronas and refused to reveal the others.

The step taken by PLN to open the tender means that it will end up the monopoly of the state oil and gas Pertamina as the sole party, which supply oil for PLN.

Each year, PLN buys eight million kl to Pertamina in combination of HSD and fuel oil with industrial prices to fire oil-fired power plants, which accounts for 24 percent of its total plants.

"We can save up to Rp 500 (US$0.05) per liter if we buy the oil from other parties," PLN president director Eddie Widiono told reporters Monday on the sidelines of a meeting with the House of Representative.

The price set up by Pertamina is 14.5 percent higher than the oil price determined by the Mean of Platts Singapore (MOPS).

Eddie calculated that if the company were able to import all the oil supply, the company could save up to Rp 4 trillion per year. (ika)

Source: The Jakarta Post - Also posted online (

Biofuel on the News

Wednesday, January 17, 2007

Indonesia biodiesel sector faces price squeeze

By Fitri Wulandari
Wed Jan 17, 2007 5:21 AM ET

JAKARTA (Reuters) - Confusion over pricing and a lack of incentives could hamper Indonesia's biofuels industry and dash its hopes to join the green fuels rush, domestic biofuel producers said.

Asia Pacific's only OPEC member subsidizes retail fuel prices, meaning biofuel has to compete with cheap subsidized fossil fuels. At the same time, the cost of the subsidy means less government cash is available for biofuel production incentives.

All this is against a backdrop of falling global diesel prices, against which biodiesel is priced, and rising costs of feedstock palm oil, that have slashed biodiesel margins across the region.

"When crude oil is down, the biodiesel price is also down as it is a substitute for diesel oil," Tutik Herlina Mahendratto, bio energy manager at plantation firm PT Bakrie Sumatra Plantations (UNSP.JK:
Quote, Profile, Research), told Reuters.

His firm is constructing a 100,000 tonnes per year biodiesel plant, expected to come on stream by mid-2008.

"Without tax incentives, it will be difficult for biodiesel to compete with fossil fuel and the business will be unattractive," Tutik added.

Crude palm oil is currently quoted around $560 a ton in Belawan port, up from $395 a ton in late May. Crude oil prices have fallen from a record high of $78.40 per barrel in July to around $52 a barrel now, as mild weather in the United States curbs heating fuel demand.


The government was not unaware of the problem, but budget constraints have tied its hands.

"Fuel prices in Indonesia are subsidized, thus cheaper than international prices. When biofuel surges above crude oil prices, the government is unable to increase the subsidy," said Alhilal Hamdi, the head of the National Team for Biofuel Development.

Producers are instead turning to exports, where they can sell their output at prices above those available in Indonesia's subsidized market.

About 80 percent of the country's biodiesel output would be exported, said Hamdi.
Surging production costs and low domestic biodiesel prices are being felt most by Indonesia's smaller biodiesel producers, who struggle to export and don't own palm oil plantations.

"Small producers have closed down their businesses. Big producers who buy raw material at a competitive price and export most of their products can survive," said Eka Bakti, director of PT Kreatif Energi Indonesia, a consultant firm for construction of biofuel refinery.

State oil firm Pertamina, which is retailing biodiesel made of 5 percent crude palm oil blended with 95 percent diesel oil, said its profit margin had shrunk since it began selling the green fuel in May 2006.

It buys raw material at 5,800 rupiah ($0.639) per liter, but sells biodiesel at gas stations at the same price as subsidized diesel oil of 4,300 rupiah per liter.

"We're still make profit, but profits from selling each liter of Biosolar is 85 rupiah lower than selling diesel oil," Hanung Budya, the company's deputy director of marketing said, referring to its biodiesel brand that is sold in 209 gas stations.

The government currently subsidizes biodiesel at the same level as fossil fuel, leaving Pertamina to cover the difference when biodiesel production costs exceed fossil fuel costs.

"We will expand it (biofuel production) if the government has a solution to Pertamina's shrinking profit," Hanung said.

Indonesia is expected to produce 750,000 tonnes of biodiesel this year, up from around 180,000 tonnes. Output is estimated to reach 1.2 million tonnes in 2008.

($1=9,072 Rupiah)

© Reuters 2007. All Rights Reserved.

Originally posted on Reuters ( )

Biofuel on the News

Thursday, January 11, 2007

MoUs on biofuel development to be signed

Source Antara 11-01-2007

JAKARTA - Several Memorandums of understanding (MoUs) on biofuel development was scheduled to be signed here on Tuesday with a total value of investment worth more than 10 billion US dollars.

Some 14 ministers and governors were expected to be present in the signing of the MoUs at the Energy and Natural Resources Department.

The development of biofuel would involve more than 50 companies, according to Head of the Biofuel Development Acceleration Team Al Hilal Hamdi.

The US$10 billion fund would be used to finance activities and processes from plantation, factory processing up to marketing of biofuel, he said.

Most of the MoUs would be integrated from the sectors of on-farm until off-farm to absorb more job opportunities.

Following the MoU signing, investors would conduct feasibility studies for around three to four months and would be followed with permit processing.

"We hope that the investment could be started this year," he said.

It was reported earlier that state-owned electricity company PT Perusahaan Listrik Negara (PLN) planned to operate biofuel-fired power plants next year with a combined capacity of 58 megawatts, an energy development official said.

The power plants to be located in several regions such as Lampung, West Nusa Tenggara, East Nusa Tenggara and South Kalimantan would use palmoil as their main energy source, Alhilal Hamdi said recently.

Hamdi who is also president of PT PLN's board of commissioners said the plan was part of the company's efforts to maximize the use of alternative energy sources in its operations.

Due to the high price of oil, biofuel and other alternative energy sources would be the main alternative to support national industries and the economy in general.

He said the use of biofuel would also help improve the economy of farmers producing palm oil, cassava, sugarcane and jatropha.

Source Antara 11-01-2007. Also available online (&p=Home/1&fm_formmanager_articlecategory_Article_gbpage=2&intrafm_formmanager_articlecategory_Articleid=1168506406_44)

Biofuel on the News

Tuesday, January 09, 2007

Indonesia the Focus of Massive $12.4 Billion in Biofuels Investments; Signing Ceremony in Jakarta

9 January 2007
Green Car Congress

Sixty-seven contracts representing US$12.4 billion in investment for biofuels development in Indonesia were signed in a ceremony in Jakarta, Indonesia this morning. The signing, conducted under the auspices of a program called the Joint Initiative for Biofuel Development, was attended by 9 Ministers of the Indonesian government and was hosted by the Ministry of Energy and Mineral Resources.

The $12.4 billion in investments covers the entire range of activities from upstream (production) to downstream (sales), according to the Chairman of the National Team for Bioenergy Development, Al-Hilal Hamdi.

Chinese firms took the lead with China oil major China National Offshore Oil Company (CNOOC) and Hong Kong Energy partnering with Indonesian palm oil producer PT SMART Tbk in a US$5.5 billion investment. Malaysia-based Genting Energy is investing US$3 billion.

Among the Indonesian institutions involved with the MoUs are Bandung Institute of Technology (ITB), Bogor Institute of Agriculture (IPB), the Research and Development Division of the Ministry of Energy and Mineral Resources are also among the institutions that signed the MOUs.

“This is part of our efforts to promote the use of alternative energy,” Head of the Biofuel National Team Alhilal Hamdi said during the MoU signing ceremony.

Banks are also expected to disburse US$2.7 billion in loans to support local farmers in supporting the biofuels project. The loans are in addition to the planned investments.

Originally posted on (