Malaysia announced a five-year plan on Tuesday to gradually upgrade its biodiesel blending facilities to support higher biodiesel blends of 20% and 30% in diesel, but scepticism remains over implementation due to the long timeline and lack of concrete details, according to a domestic producer source.
The announcement, made by Noraini Ahmad, Malaysia's plantation and commodities minister, was reported by various media outlets.
Biodiesel blending facilities in Sandakan, Tawau, Sepanggar and Bintulu have been approved for upgrades to support B20 and B30 blending, but similar information is unavailable for the rest of the country.
It is also not clear where the funding will come from, as the oil and gas sector will not be willing to fund the upgrades, the source said.
The palm oil industry may also not agree to provide such funding, as not all palm oil companies are involved in biodiesel production, unlike those in Indonesia, the source added.
The present push for higher biodiesel blends stems from surging gasoil prices and the much smaller spread between biodiesel and gasoil prices following the current Middle East conflict, as OPIS reported previously.
The push could dissipate once crude and gasoil prices have reverted to pre-crisis levels, and the price spread between biodiesel and gasoil widens.
Hence, it remains to be seen if Malaysia can remain committed to B20 and B30 in the next five years, the source said.
Malaysia's present biodiesel mandate is B10 nationwide and B20 specifically for Labuan, Langkawi island and the state of Sarawak, excluding the town of Bintulu.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
--Reporting by Kite Chong, kchong@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com
(END) Dow Jones Newswires
04-10-26 0403ET
