At the beginning of this year, SGS INSPIRE launched its podcast series on energy in transport called INSPIRE-ing Energy Talks. We aim to have a new episode every two months and SGS INSPIRE users are welcome to propose topics and join us as speakers!

In episode three, SGS INSPIRE market analyst Lucky Nurafiatin chats to Dr. Oki Murza, senior vice president of research and technology innovation at Pertamina, Indonesia’s national energy company, about SAF development in the country. Oki coordinates the research, development and commercialization of innovations to support Pertamina’s business development strategies, such as renewable diesel/hydrotreated vegetable oil and sustainable aviation fuel (SAF).

Over the past few years, more countries and airlines set trials and/or secured SAF supply for 2025-2030 to anticipate the mandatory use of SAF during that period. In addition, several airlines have chosen to invest in dedicated SAF production facilities and/or to secure feedstock supply.

Driving this investment is the European Union’s ReFuelEU aviation initiative which sets a 2% v/v SAF mandate for every aircraft taking off from any EU airports in 2025. This initiative is expected to be the key driver of global SAF production and consumption.

Working along similar lines, Indonesia’s government did set a 2% v/v SAF mandate in 2016. However, it did not work out. Nevertheless, the government is expected to continue with the implementation in line with the global aviation sector. Our podcast chat revolves around Indonesia’s SAF development, feedstock issues and future plans.

Hello everyone, welcome to the inspiring energy talks. My name is Lucky Nurafiatin. I am a market analyst for Asia Pacific for SGSINSPIRE. We provide regulatory and market analysis on conventional and alternative fuels including bio-based. Gaseous fuel synthetic fuel as well as exhaust emission regulations. Today I have Doctor Oki Muraza with me here.He is Indonesia's national oil company, Pertamina's Senior vice president of research and technology innovation. Good day, Sir. Welcome to the SGS INSPIRE podcast series.

Good day, Lucky.

And can you tell me a little more about yourself, please?

Thank you, Lucky. My name is Oki Muraza. I'm currently the senior Vice President for research and origination in Pertamina Persero, or we call it also Pertamina holding. In the past 2 1/2 years, I'm in charge for technology development, for the upstream research and then downstream research and the commercialization of the research and technology. We are covering topics in energy security for Indonesia, such as increasing productions of oil and gas by enhanced oil recovery, carbon capture, utilisation and storage. Then in the downstream, we have a number of research, including the development of catalyst for our refinery classical hydrocarbon refinery and also bio refinery. Then we are also working on development of a number of chemicals for oil field chemistry and for other industrial use.

Thank you very much. That's impressive. Now we are here to discuss sustainable aviation fuel or SAF. For the past few years, we have been seeing companies and countries setting net zero carbon emission target deadlines and they are working towards them. One of the sectors that countries are looking to reduce their carbon emissions is the transportation sector, be it land, water and air transport. In terms of land transport, we understand that Indonesia is currently implementing B35 or diesel, containing up to 35% of biodiesel, fatty acid methyl Ester or FAME and I think it's the same for water transport as well. Please correct me if I'm wrong. For the aviation sector trials and demo flights using bio-based aviation fuel have been carried out for about a decade, I think in many countries. Later on, the community and industry changed the bio-based aviation fuel to sustainable aviation fuel or SAF that has been discussed for more intensively in the past few years. Moreover, a little more than a month ago, I think at the end of April, the Council of the EU and the European Parliament reached a professional agreement on the proposed ReFuelEU Aviation, sustainable aviation fuel regulation. As part of this agreement, from 2025 at least 2% of jet fuel must be SAF for all flights originating from the EU airports. This mandate increases in stages every five years and reaching 70% by 2050. Looking into the Indonesia's biofuels mandate, the government has mandated the use of 2% SAF by 2016. But no news beyond this mandate and neither explanation nor enforcement were noted so far. A few years ago, Pertamina succeeded in the trial of bio aviation fuel. Can you explain more about this trial?

Thank you, Lucky. Indeed, we have been working for some time on sustainable aviation fuels within the Pertamina itself together with the universities and government. We have done a number of trials and application tests since 2015 and in 2021, for instance, our Sub holding, Pertamina Refining and Petrochemicals produce SAF J2.4 in refinery unit 4 in Cilacap. These fuels have been used in engine tests within Garuda Maintenance Facility and we have seen that we get good performance. The performance of engines by using these bio jet fuels, so far are as good as the conventional aviation fuels or even better. The study was continued with ground tests and flight tests using the CN 235 military aircraft manufactured by PT Dirgantara Indonesia, and then based on the pilot experience and the engine adaptations. We can see there are no significance results of SAF as compared to the conventional aircraft performance when we compare between the bio jet fuels or the the new name is Sustainable aviation fuel to the conventional aviation fuels. Now, next development, we are having coordination with our government, within Pertamina, with Garuda Indonesia and Ministry of Energy and Mineral Resources and together with universities to have flight tests on commercial aircraft. We target the flight tests close to August 2023 because we have important day on the 17th of August..

I see. The Independence Day.

Independence Day, yes.

So, the flight test will be during the Independence Day or part of the Independence Day celebration perhaps.

Yes, we are doing our best and now we are discussing the logistics etc. within Pertamina in such a way that we can have enough biofuels or sustainable aviation fuel for this flight test.

OK, you said earlier Jet 2.4? Is it the same fuel that will be used on the commercial test flight with Garuda?

Yes, at this moment we are still discussing, but for the time being, we have the technology ready to produce J2.4 for sale and for the flight tests that we we mentioned earlier.

During the first flight test, the J2.4 do you know whether it's used purely as a drop in fuel or blended with a conventional aviation fuel?

Yes, it's blended, the portion of the renewables is 2.4%. It's blended, with conventional avtur or aviation fuel.

I see, when you said about J2.4, I mean the Pure SAF itself. What type of feed stock that are you using?

Yes, this is very interesting question because Indonesia is basically having huge palm oil plantations. Currently we are using this domestic feedstock because we have it a lot in Indonesia. We use the refined bleach and deodorised palm kernel oil to produce this J2.4. Even though in house we are also exploring alternative feedstocks, as you may be aware that this palm oil base feedstock is quite expensive, for the time being we are exploring different feed stocks, be it from the waste stream like used cooking oil (UCO) or non-edible oils such as Pongamia Pinnata and calophyllum, Innopolilum etc. Recently we also discussed with a university, the Minister of Energy and Mineral Resources to utilise waste from coconut (copra), so rejected ones, who already turned into a bit black and then we cannot basically export that kind of copra. We are now studying to to get the oil from it and then we apply hydrogenation to remove the oxygen, we hope that this basically will give SAF with lower costs.

I see, speaking about Pongamia Pinnata I remember you need to wait for the trees to be around seven years of age before you can harvest the seeds (the oil fruit), so typically that's the most difficult period because you cannot do anything in seven years. That's why in other places, like India, where there is a lot of pongamia pinnata as well, it didn't really take off. But it's interesting to see we try a lot of feedstocks actually to work on because we cannot rely on one type of feedstock only nowadays. Apart from feedstock, as we understand when we look into the ASTM, the American standard, there are seven pathways that are recognised and approved by the ASTM to produce SAF, we see fischer-tropsch (FT) one of them and then hydrotreated esters and fatty acids or as we call it HEFA, hydroprocessed hydrocarbons esters and fatty acid or HC HEFA and then we look into catalytic hydrothermal (CHJ) jet fuel. There's alcohol to jet (ATJ), there is synthesised isoparaffins or so-called SIP. They're also Co-processing. From out of these seven pathways, which pathway is currently used by Pertamina and maybe you can explain a little bit what is the background of choosing that?

This is a very interesting question. We we can check one by one. For instance, fischer-tropsch the challenge for the fischer-tropsch, it's high capex because fischer-tropsch can be with the same gas can be produced either by natural gas or from coal and and others basically, and even biomass. But the gasification is one of the costly instruments in the fischer-tropsch route. Then the hydrotreated esters and fatty acid, this is something that we are basically doing, we are applying hydrogenations. The hydrotreated esters and fatty acids, or hydroprocessed hydrocarbons, which we have a lot of fatty acids in Indonesia. This is basically the route that we expect to give us the lowest cost, others like alcohol to jet for instance, is quite lengthy process because we need to get ethanol first. The ethanol price is still quite high because in Indonesia now we are producing ethanol from sugar cane, in a sugar cane refinery, the challenge is the sugar cane in Indonesia is now limited. In Asia, we are importing sugar. We are exploring other feedstocks, but still in the research phase. Once we have the ethanol then we can convert ethanol to ethylene by the hydration and then with the ethylene we can do polymerizations in order to get finally the SAF itself with the number of carbon around twelve. It will be very costly, but in terms of mitigation, this is very interesting because many countries, developed countries are targeting this route. In Indonesia, considering that Indonesia is basically the largest country with fatty acids oil with vegetable oil, we we should utilise the strength of Indonesia, in which that we can have the biodiversity of different vegetable oils. Not only oil, but we have also Pongamia pinata, Kemiri sunanand a number of plants. Indeed, the challenge is how can we have large scale plantations of these plants.

I see, so basically you can choose between those seven pathways, but the one that you're currently use is mostly HEFA and HC HEFA?

Yes.

As you mentioned just now, you're using ethanol to produce SAF as well. Are you looking into the alcohol to jet technology or only like you mentioned the alcohol to ethylene and then polymerizations and then SAF?

Yes, so this is basically the route, which is proposed by many developed countries, like when we discuss with Japan, with US mostly this is the route that they are targeting because they can start with the CO2 molecule. Alcohol will be from CO2 with hydrogen, Hydrogen should be from green, such as geothermal. Then we can get alcohol, from the alcohol we we can get jet fuels. In terms of maximising the CO2 mitigation, indeed this is one of the potential routes. However, in terms of the price, the affordability and considering Indonesia is basically rich with sun light throughout the year. Then we have biodiversity, lots of different vegetable oils. So basically, Indonesia should utilise the vegetable oils, not only Palm, we have a number of vegetable oils in Indonesia.

So at least, but you you can have both ways between alcohol to jet and the HEFA itself.

Yes.

That’s interesting. because there is no regulation saying that you need to choose one of those seven technologies. You can use anything and any number of things you can combine anyway to produce that SAF.

Also, its important that before the next climate conference, COP 28, in Dubai, our discussion with the aviation institutions ICAO. We need to propose the feedstock which is available Indonesia because this is politically something that we need to propose to the aviation organisation.

A little bit off topic, but are you aware that actually in Europe there has been a discussion and actually in the Renewable Energy Directive (RED), they want to phase out palm-based fuel by 2050.

Yes, basically we met recently with the ambassador of EU for Indonesia and Brunei Darussalam. That's also the information that we heard from him, that’s why we are now considering a number of feedstocks including waste from copra, coconut copra and other plantation oil we're looking at.

What is the current capacity of the Pertamina SAF production plant?

Yes. So currently we have the revamped distillate hydrotreating in our refinery unit in Cilacap, West Java. The unit can produce up to 1350 kioliters per day. Meanwhile, we are also expecting that we are going to have the stand-alone green refinery in Cilacap and Plaju, in order to produce about 900,000 kiloliters per year of SAF. Speaker 1 – Lucky Nurafiatin That's only about 900 million.

Yes.

Is it enough? I mean, do you have any estimation of how much aviation fuel consumption last year in Indonesia?

Yes. So in 2022, for instance, the demand of efficient fuel is around 3.42 million kiloliter per year. So for 2% of SAF implementation, this will give us around 68.4 thousand kiloliters of SAF that will be needed. Hopefully with the future standalone Green refinery in Cilacap and Plaju, , we can produce more than 900,000 kiloliter per year more than enough.

More than enough more than for 2%. More than enough, but when you Increase that in stages perhaps you need to build another one by your refinery. Do you also aim to export SAF?

Yes, ideally because we potentially have a huge number of vegetable oil in Indonesia. We are now having discussions with with Japan for instance. We try to explore the possibility to export sustainable aviation fuel to Japan. The affordability in Indonesia will be challenging. So if we have a chance to export the fuel to international destinations where the affordability is much better, then they can have the premium price, which they're after sometimes, we can get the return or payback period from our plant and then it is easier for us in Indonesia. So, the idea is to have the market first, secure the market internationally and once the economics get better, we can sell it also in Indonesia. In Indonesia the affordability is the issue, as you know the world is divided in the GDP per capita, in Indonesia, our GDP per capita is still less than $5,000 per capita while in developed countries, including Singapore, that number is already above 50,000. The gap is huge between the developed and developing countries.

Let me get this straight. Your thinking of exporting first before the domestic usage of SAF? Do you think the government will mandate the use? I mean we already have the mandate but there's no enforcement whatsoever from the government on that. Do you think the government will enforce for domestic flights? I understand that for water now they also use B35 for water transport, how about the domestic flights? Will the government create a mandate for SAF? Because I understand in Japan, for example, while not many countries in Asia are mandating that, but in Japan the government mandate about 10% by 2030 for domestic flights. What do you think about Indonesia?

The mandate is already in place, I think in one a PerMen or ministerial decree, the challenge is how to produce at scale economically because the RBDPKO refined and deodorized Palm Kernel Oil is quite expensive feedstock, there is the challenge to sell SAF to the local customers because there will be impact on the aviation in Indonesia , the price may be transferred to the customer, which may increase the domestic flights, the cost of tickets etc.

I remember that. There’s an organisation of the ICAO which is CORSIA is mainly for using the SAF and renewable fuels and between 2022 until 2026, I think it's still. The airlines only use it as a voluntary basis for SAF on a voluntary basis, but from 2027 I think it becomes mandatory for the airlines, especially when it's travel for international flights. India just actually announced that they will join CORSIA Movement in 2027 only, so not from now. What about Indonesia do you think? Well, at least if they don't use for the domestic flights, will they use it for international flights?

Yes. Basically, we have the presidential regulation number 22 2017 on the National Energy Plan. This is also related to the regulation from Ministry of Energy and Mineral Resources regulation number 12 2015 in which that we expect the content of SAF in 2016 will be around 2% and then gradually it will increase to 3% and finally we expect to have it around 5%. This is something which is already regulated by the government and hopefully we we can make it economically available so we can sell it with the price in which that it will not impact to the customer.

Typically, airlines will pass the cost to the customers anyway. So, a little come back to the CO2 as an E-fuel, I also look into it that the EU. The refuelEU I mentioned earlier also have some small percentages of SAF should come from E -fuels or synthetic fuels. You earlier mentioned as a possibility of producing ethanol from CO2 and then using the green hydrogen at the end of the day to produce SAF from ethanol. This perhaps will consider as an E-fuel. Like you mentioned you see that as well, do you think that E-fuel SAF will be added to the Pertamina's portfolio, perhaps in 5-10 years down the road.

Yes, we expect that Pertamina will have SAF as a good business, profitable business, it’s one of our aspirations because the CO2-to-fuel, or the E-fuels which we are producing synthetic hydrocarbon from CO2 in which that we get it from carbon capture reacted with the green hydrogen in which that we need also green electricity. This from our calculation the price is quite high, it will be challenging for us to market that premium energy fuel in Indonesia.

So, we look into export again, probably perhaps to some parts of covering and for the ROI for the CapEx, right. OK. Last question, do you think we will have enough supply of SAF?

Yeah, we are confident that Indonesia is one of the countries blessed with biodiversity. So, in Indonesia we have sunlight continuously. Enough sunlight and enough rain. The energy storage that we have is already with the plantations that we have with the plants, so we just need to have the plantations which is dedicated for energy, it can be Pongamia pinnata, it can be Calophyllum inopyllum etc. in such a way that the costs of the materials will be affordable. Another thing is basically we need to put the concept of biorefinery. In the typical biorefinery concept, the energy is basically at the bottom of it. It is high volume, but low price, and basically on the top of the triangle, on the top of the pyramid, we have the specialty chemicals that we can get from vegetable oils such as materials for cosmetics, materials for supplements, vitamins which having a much better price, so there will be cross subsidy between the products that we can produce for cosmetics and also for vitamins, together with the energy sector.

So higher value subsidising the lower value products. That's very interesting and that's from the Indonesia point of view. From the global point of view. Do you think we will have enough supply of SAF?

Yes globally, I think the interesting part of this energy transition, every country will move forward the to utilise their resources. As you mentioned that even now there are different pathways, at least 7 pathways which are already approved. Yeah, starting from fischer-tropsch to the synthesise isoparaffins. We are confident that Indonesia can be one of the players in SAF business. Hopefully we can also produce it for inside Indonesia, but also for the flights that we have to Europe and to many other countries.

Yeah. Thank you very much for your explanation and this conversation on SAF or sustainable aviation fuel. It is too early to say whether we will have enough feed stock to produce SAF at the volume required globally in the future, for example, because it increases the volume and it increases the the percentage as well. But I think in addition to switching fuel to SAF, we also can pretty much rely on the development of the aircraft technology too, so they can produce much more efficient engines and consume significantly lesser fuel compared to the existing ones that are now in operations. Finally, let's let's hope that whatever we do to achieve this net zero carbon emissions will not leave unintended consequences for the next generation to come. Thank you very much Dr Oki Muraza. Yeah, and and goodbye for now.

Thank you very much. Have a good day.