Indonesia: Govt mulls using Pertamina tanks to cut biodiesel transport costs

The government is mulling the use of tanks belonging to upstream subsidiaries of state-owned energy holding company Pertamina to store fatty acid methyl esters (FAME), the main component in 20 percent blended biodiesel ( B20 ).

The Energy and Mineral Resources (ESDM) Ministry’s research and development head, Dadan Kusdiana, said the move intended to optimize existing facilities and cut costs in the FAME distribution.

“However, we must ensure several aspects, including the availability of the tanks, their specifications, handling and safety and other supporting infrastructure,” he told The Jakarta Post on Monday. He said that the facilities under consideration were only those that belonged to Pertamina, not private contractors.

The government introduced the mandatory use of B20 in September 2018 in a bit to reduce oil exports and to optimize the use of palm oil for energy.

The ministry has this week started inspecting eight storage facilities belonging to Pertamina’s upstream subsidiaries: the Senipah Tank Facility of Pertamina Hulu Mahakam, the Lawe-lawe and Tanjung Santan tanks of Pertamina Hulu Kalimantan Timur, the Badak Field of Pertamina Hulu Sanga-Sanga and two Pertamina EP (PEP) Asset Vs in Tanjung and Sanga-Sanga.

Dadan said the shortage of B20 blending facilities had increased the distribution costs for FAME. He said Pertamina’s refinery unit (RU) V Balikpapan had implemented a ship-to-ship (STS) method to reduce transportation costs, but that it still remained high.

“We think one of the solutions for cutting costs is to use idle oil tanks owned by private oil and gas contractors that are located close to RU V Balikpapan,” he said.

The government has targeted distributing 6.2 million kiloliters (kl) of FAME this year, 58.5 percent more than last year’s target. (bbn)