Musim Mas, Wilmar, others win tender to supply 1.85m kl of biofuel to Pertamina

JAKARTA (rambuernergy.com) – Eleven companies, including two giant biofuel producers PT Musim Mas and two companies of Wilmar Group, have won tenders to supply fatty acid methyl ester (FAME), a type of biofuel, amounting to 1.85 million kilo liters (kl) worth approximately Rp11 trillion ($806.9 million) to the state-owned energy company PT Pertamina.

The contract was signed on Friday by Pertamina’s Director for Marketing Ahmad Bambang and executives of the eleven companies.

PT Musim Mas Batam and PT Musim Mas Medan secured a contract to supply 338,982 kl of FAME, PT Wilmar Bioenergi Indonesia and PT Wilmar Nabai Indonesia will supply 920,411 kl of FAME, PT Pelita Agung Agri Industri at 90,552 kl, PT Darmex Biodiesel at 130,744 kl, PT Cemerlang Energi Perkasa at 148,016 kl, PT Ciliandra Perkasa with a volume of 73,078 kl, PT energi Bahari Lestari 20,078 kl, PT Anugerah Inti Gemanusa at 49,361 kl, PT Primanusa Palma Energy at 44,189 kl and PT Bioenergi Pratama Jaya 33,375 kl.

Pertamina will purchase the FAME from 63 locations. Musim Mas and Wilmar will supply Pertamina from 14 and 29 locations respectively.

The biofuels will be supplied to Pertamina for period of November 2015 to April 2016. The biofuels will be blended into diesel and becomes biodiesel with a composition of 15 percent in every kilo of diesel fuel.

Under the existing government program, the government requires Pertamina to blend 15 percent of biofuel into diesel (B-15) in 2015 and will increase to 20 percent (B20) in 2016.

Ahmad Bambang said the biofuel product price is set based on Means of Platts Singapore (MOPS). “Given the current MOPS level, the total value of the purchase  is around Rp11 trillion,” he said.

Bambang said in the ten months to October, Pertamina has distributed 300,000 kl of FAME and expected to reach 966,785 kl for full year, or equals to 5.98 million kilo liters of biodiesel fuel.

Pertamina projected that with the implementation of B-20 program next year, Pertamina expects to purchase 5.14 kl of FAME or equals to 26 million kilo liters of biodiesel. Of this amount, 1,26 million kl will be supplied to meet the demand of state electricity company PT PLN.

Biofuels are alternatives to petroleum, obtained from renewable natural resources, such as palm oil.

Biodiesel is a type of biofuel. Palm biodiesel is an alternative fuel derived from palm oil and can be used in internal combustion engines, i.e. diesel engines without any modification. It refers to methyl esters derived from palm oil through a process known as ‘transesterification’.

In contrast to conventional diesel, the waste product is not black and has less sulphur, hence the combustion emission produced is safer for environment.

Biodiesel largest producers

Wilmar, a Singapore-based palm oil company, currently operates at seven biodiesel plants, spreading in Dumai and East Java, with annual capacity of 2.4-2.6 million kilo liters, or around 7,000 kl per day.

Musim Mas currently operates 2 units of biodiesel plants located in Medan and Batam with total capacity of 850,000 tons per annum, Royal Golden Eagle Group with production capacity of 400,000 tons, FIRST Resources with production capacity of 250,000 tons and Permata Hijau Group with production capacity of 200,000 tons.

Darmex Argo Group currently has production capacity of 150,000 tons and Eterindo Group with production capacity of 140,000 tons per annum. A number of State-Owned Oil Palm Company (PT Perkebunan Nusantara) and many others have also begun producing biofuels.

Sinar Mas group is also planning to construct a biodiesel plant in Dumai, Riau with estimated investment of US$ 300 million.

In 2013, the Energy and Mineral Resources Ministry (ESDM) issued regulation of Minister of ESDM No. 25/2013 which decides the blending of 10 percent biodiesel into diesel oil (B-10) to be applied in 2014, B-15 in 2015 and increased to 20 percent (B-20) in 2016. This regulation has sparked an increase in demand for biodiesel, in particular from Pertamina. (*)