Indonesia is considering regulating crude palm oils exports to meet the B50 demand

Indonesian government could regulate crude palm oil exports to ensure that there is sufficient supply domestically to produce biodiesel. This was announced by the country's energy minister on Tuesday. Since more than 10 years, the world's largest producer of palm oils has been implementing a biofuel program that blends palm oil-based fuels with diesel to reduce dependence on fuel imports. The current mandate is to blend 40% palm oil and diesel, also known as B40.

The plan by Jakarta to increase this to B50 during the second half 2026, has caused concern that it may reduce global edible oil supply as Indonesia will have less to export overseas.

Energy Minister Bahlil Lahadalia acknowledged that B50 would increase the domestic demand for palm oil. He said the government was considering increasing palm oil production in order to meet this demand or reducing exports.

Bahlil said to reporters that "cutting exports is one of our options".

He said: "I repeat it's an option to regulate domestic and foreign demand, and one of our tools is DMO." Indonesia has a law called the Domestic Market Obligation, which ties a palm-oil company's export license to mandatory sales of cooking oils on the local market.

Bahlil added that no final decision had been made on the possibility of opening new palm oil plantations to increase production.

In August, the government finished testing in laboratories on B50 and will now move to road tests. Energy ministry data shows that adopting B50 will require 20.1 millions kilolitres palm oil-based fuel per year to mix with regular petroleum diesel. This compares with 15.6 million KL for B40. (Reporting and writing by Gayatri Sroyo; Gayadette Christina)

(source: Reuters)