The Ministry of Energy and Mineral Resources (ESDM) backs State oil and gas company PT Pertamina’s plan to acquire a Brazilian bioethanol company as a strategic move to foster the bioethanol market in Indonesia.
Dadan Kusdiana, Secretary-General at ESDM ministry, emphasized that this acquisition is a temporary measure aimed at developing the domestic bioethanol market.
Bioethanol, derived from plant-based materials such as sugarcane, is often blended with gasoline to create biofuel.
“This is a preliminary step to ensure we can progress and grow the market domestically,” Dadan told a meeting at the Directorate General of Oil and Gas on Friday, June 14, 2024.
Despite the immediate strategy of importing bioethanol, Dadan highlighted the long-term goal of establishing a complete domestic production chain from upstream to downstream. This would enable Indonesia to fully benefit from carbon emission reductions.
The carbon reduction benefits, Dadan said, stem from the growth of sugarcane used as the raw material for bioethanol. As sugarcane grows, it absorbs carbon dioxide and releases oxygen, thereby helping to reduce emissions.
“If the production is done abroad and used here, the emission reduction benefits the overseas producing country, while the emissions from burning occur here,” he said.
Pertamina is currently conducting a comprehensive study on potential acquisition of a sugar and ethanol factory in Brazil. This initiative aligns with President Joko “Jokowi” Widodo’s directive to expand Pertamina’s business into future-oriented, sustainable economic practices.
“We are still in the due diligence phase to achieve the best possible outcome,” Fadjar Djoko Santoso, Pertamina’s Vice President of Corporate Communication, said earlier on Tuesday, June 11, 2024.
President Jokowi has been encouraging Pertamina to venture into sustainable and future-oriented businesses, a sentiment echoed by the Coordinating Minister for Maritime Affairs and Investment, Luhut Binsar Pandjaitan.
Luhut urged Pertamina to acquire the Brazilian sugar and ethanol company to enhance domestic fuel quality by incorporating bioethanol blends.
“Pertamina needs to expand internationally. It’s essential for corporate profits and to explore future business and economic opportunities,” President Jokowi remarked during the 52nd anniversary celebration of the Indonesian Young Entrepreneurs Association (HIPMI) on June 10, 2024.
The proposal for Pertamina to acquire a Brazilian sugar and ethanol plant was first mentioned by Luhut at the same event. He noted that Pertamina is currently performing due diligence on the prospective company.
While the specific identity of the Brazilian company was not disclosed, Luhut mentioned that the acquisition would gradually improve the quality of domestic gasoline by reducing sulfur content.
If successful, this acquisition could lower the sulfur content in fuel from the current level of 500 parts per million (ppm) to between 50 and 60 ppm within three years.
“This would provide Pertamina with an energy and sugar source from Brazil, enhancing our energy security,” Luhut said.
