B50 mandate may create diesel oversupply of up to 8.3 million kL annually
Friday, May 1 2026 - 08:50 AM WIB
By Pandu Setiabudi
Indonesia’s planned rollout of the B50 biodiesel mandate could lead to a significant surplus of diesel fuel, with excess supply projected to reach between 2.8 million kiloliters and 8.3 million kiloliters per year, according to an executive at Pertamina Patra Niaga.
Sigit Setiawan, Vice President of Business Development at Pertamina Patra Niaga, said the increase in biodiesel blending would reduce demand for pure diesel, creating an imbalance in the downstream fuel market.
“With the increase to B50, we will collectively face the impact of excess diesel that cannot be handled,” Sigit said during the Power Talk B50 event on April 30.
He estimated that, under current refinery capacity, excess diesel could reach around 2.8 million kiloliters annually. The figure could rise further with additional refining capacity, including the planned refinery project in Tuban involving Pertamina and Rosneft.
“With the current refinery capacity, there will be an excess of 2.8 million kiloliters per year, but with the Tuban project, it will increase by 5.5 million kiloliters, bringing the total to 8.3 million kiloliters per year,” he said.
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Sigit explained that refinery operations cannot easily adjust output to match changes in diesel demand, as refineries produce multiple products simultaneously. While domestic diesel supply and demand are currently balanced, reducing diesel production could affect the availability of other fuels.
He noted that gasoline remains heavily dependent on imports, accounting for about half of domestic consumption. Cutting diesel output to manage surplus could therefore increase reliance on imported gasoline.
Exporting excess diesel may also present challenges, as most of Indonesia’s diesel production is classified as high sulfur, while many international markets have shifted to low sulfur fuel standards. Additional logistics costs would further reduce the economic viability of exports.
“Our diesel products are still categorized as high sulfur, while in other countries, very few still use high sulfur fuel,” Sigit said.
To mitigate the potential surplus, Pertamina Patra Niaga has explored converting diesel into other products such as aviation fuel, Pertadex, and ultra low sulfur diesel. However, Sigit noted that current conversion capacity is not sufficient to fully absorb the projected excess.
Editing by Alexander Ginting