Indonesia Implements Low-Sulfur Diesel Use in March

Indonesia, Southeast Asia's biggest diesel importer, started implementing the use of low-sulfur diesel this month after giving PT Pertamina and fuel retailers a year to prepare for the regulation.

Companies are allowed to sell and use diesel with a maximum sulfur content of 3,500 parts per million, or 0.35 percent, starting March 17, Luluk Sumiarso, director general of oil and gas at the energy ministry, said by telephone today. That's down from 0.5 percent.

Indonesia wants to improve its air quality as fumes from motorcycles, vans and lorries choke cities including Jakarta and Surabaya. Manufacturers asked the government to reconsider the policy as low-sulfur diesel is more expensive, Mohammad Hidayat, an energy ministry official, said on March 16.

``Diesel users and retailers had one year to prepare for this and that should have been enough,'' Sumiarso said. ``We are sticking with what we decided last year.''

Refineries in Indonesia are able to meet the government's requirement, Djaelani Sutomo, head of fuel division at state oil company Pertamina, said by telephone today.

Diesel imports based on term contracts will have, at least until June, a sulfur content of 0.5 percent, Sutomo said. Pertamina has secured until May the diesel imports from the spot market, he said.

``It will be impossible to change the specifications for these contracts,'' Sutomo said. ``We will ask for diesel with 0.35 percent sulfur content for future imports.''

Indonesia, the second-smallest member of the Organization of Petroleum Exporting Countries by output, imports about a third of its oil products each year because its daily refining capacity of 1.06 million barrels isn't sufficient to meet domestic fuel demand.

Pertamina, which sells more than 98 percent of the oil products used in Indonesia, imported 159 million barrels of fuels in 2005, according to data from the energy ministry.

Qatar is the smallest producer within OPEC.

source:www.bloomberg.com