Palm oil demand from Indonesia biodiesel sector to surge by 2020

Palm oil demand from Indonesia biodiesel sector to surge by 2020

Indonesian demand for crude palm oil (CPO) for use in biodiesel will grow
nearly 70% by 2020, a government agency said on Friday, as the price gap
with conventional diesel narrows and more subsidies for blending become
available.

Indonesia, the world's top producer of palm oil, is pushing to increase
usage of biodiesel to cut its oil import bill andcurb greenhouse gas
emissions.

Its so-called B20 programme requires a minimum 20% blend of bio content in
diesel fuel this year, up from 15% in 2015.

The biodiesel sector's appetite for palm oil will increase to 10.6 MMt by
the start of the next decade from 6.3 MMt forecast for this year, said Bayu
Krisnamurthi, chief executive of the Indonesia Estate Crop Fund.

"Looking forward, we calculated that by 2020, 26% of palm oil will go to
biodiesel, so biodiesel becomes the new demand for the palm oil industry,"
Krisnamurthi said at a palm conference in Bali on Friday.

The fund is a government agency in charge of collecting palm oil levies to
finance biodiesel subsidies in the country.

"The gap is getting thinner," said Krisnamurthi, referring to the spread
between prices for biodiesel and conventional diesel coming down by around
30% this year as oil prices strengthened.

The palm industry hopes the drive towards biodiesel will provide underlying
support for prices for the edible oil, which hit a four-year high on
Thursday amid a forecast decline in Indonesia's palm oil output.

Meanwhile, the country is targeting a 90% increase in unblended biodiesel
consumption in 2017 to 5.5 MMkl from an estimated 2.9 MMkl this year, an
energy ministry official said.

The 2017 target is "with the assumption that there is an expansion of
subsidies", Dadan Kusdiana, secretary of the renewable energy directorate,
told reporters on Friday.

Indonesia started collecting a levy on its palm oil exports in July 2015 --
$50 per tonne for crude palm oil and $30 for processed palm oil products --
and uses part of that to help fund biodiesel subsidies.

Levies collected by the Indonesia Estate Crop Fund would also need to
increase to pay for additional biodiesel subsidies, Kusdiana said, adding
that his office had proposed an incremental increase.

The fund is targeting a 14% increase in levies collected in 2017.

--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

Link to Original Article:
http://www.hydrocarbonprocessing.com/news/2016/11/palm-oil-demand-from-indon
esia-biodiesel-sector-to-surge-by-2020

--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com