Pertamina to Invest US$480 Million for Bio-Aviation Fuel Production

Indonesia’s state-owned oil and gas company, Pertamina, is investing US$480 million in palm oil-based bio-aviation turbine (bioavtur) fuel production and the construction of a refinery.

In 2013, Indonesia’s Energy and Mineral Resources Ministry created Ministerial Regulation No. 25/2013 on biofuel, requiring the country’s aviation industry to reduce its use of fossil fuels through the inclusion of at least 2% biofuel in its aviation fuel beginning in January 2016. The required blend will increase to 3% in January 2020, and 5% in January 2025.

The company is currently finalizing a feasibility study for the plant, which should be concluded within the next six to eight months. The construction is expected to take up to two years, and production at the site is expected to be online in 2018. The location for the refinery has not been released, but it is believed that it will be located near one of the international airports in Java or Sumatra.

Pertamina is targeting a production capacity of 260 million liters per year, however, the domestic market will likely use only 10% of the plant’s output. But considering the lack of bioavtur production, the plant will be available to supply surrounding countries once their policies shift toward the required use of the biofuel.

To secure a steady supply of crude palm oil (CPO), Pertamina plans to form joint ventures with palm oil companies, but declined to name the companies involved at this time.