Indonesia is preparing to convert surplus diesel into aviation fuel under its B50 biodiesel strategy. (Photo: Cabinet Secretariat of the Republic of Indonesia)
Aviation fuel costs have begun to ease following the Iran war, but airfares across Asia remain elevated as strong travel demand and reduced low-cost carrier capacity continue to support ticket prices. The slow pass-through from lower fuel costs to cheaper fares has kept attention on aviation fuel supply and refining capacity across the region.
Indonesia plans to convert a growing surplus of diesel into domestically produced aviation fuel, as its biodiesel mandate and refinery expansion reshape the country’s refined fuel balance.
Energy Minister Bahlil Lahadalia said Indonesia expects to generate 3 million to 4 million kiloliters of surplus diesel this year. The Ministry of Energy and Mineral Resources and state-owned Pertamina are preparing a roadmap for domestic aviation fuel production, with construction of a dedicated plant targeted to begin by the end of 2026.
Unlock the full article to explore three key takeaways:
Indonesia’s B50 biodiesel mandate could increase annual foreign exchange savings from 133 trillion rupiah under B40 to 170 trillion rupiah, or around USD 9.4 billion, by reducing fuel imports.
Analysts warn that higher biodiesel demand could tighten crude palm oil supply, raise feedstock and cooking oil prices, and increase pressure on land use.
Pertamina has partnered with Boeing to advance sustainable aviation fuel (SAF) development, as Southeast Asia’s aviation market is expected to require nearly 4,900 new aircraft by 2044.
