Malaysia Begins B15 Rollout; Some Areas Could See B12 First

Malaysia has begun to gradually increase the palm oil-based biodiesel blend level in the national diesel pool to 15%, from the present 10%, according to a news report by state-owned media Bernama on Sunday.

Certain areas, such as Labuan, Langkawi island and the state of Sarawak, excluding Bintulu town, are already utilizing B20 and will continue to do so.

The government did not give any details on how the rollout will be implemented, but some areas will likely see B12 first, instead of B15, as not all blending terminals are ready to produce the latter, according to a domestic biodiesel producer.

Hence, the B15 rollout since June 1 will be done in line with the upgrading of blending facilities, which was first announced in early April, the source said.

The higher blend level is expected to have minimal impact on the Malaysian palm oil industry.

The production of biodiesel for B15 will require around 800,000 metric tons of palm oil feedstock annually, while Malaysia has a supply surplus of around 4 million mt annually, according to Plantation and Commodities Minister Noraini Ahmad.

“The increase to B15 from B10 will require around 270,000 mt more palm oil annually, and given that there are 19 biodiesel plants in Malaysia, this translates to an increase of around 1,180 mt of palm oil demand per month per plant,” the source explained.

Vehicles in Malaysia are designed to be compatible with B20, so increasing the blend level to B15 is not likely to have any negative impact in this respect. In addition, B20 has been sold in parts of the country since 2020 without issue.

The increased use of locally produced biodiesel is expected to reduce the country’s dependency on imported fossil-based diesel while supporting the domestic palm oil industry, particularly in view of high diesel prices and uncertain availability amid the Middle East conflict.

However, diesel prices are likely to fall when the Middle East conflict is resolved and the price spread between diesel and biodiesel widens. Hence, it is uncertain as to whether the Malaysian government will still be willing to maintain the more expensive B15 mandate or roll it back to B10, the source said.

—Reporting by Kite Chong, kchong@opisnet.com; Editing by Mei Hwen, mwong@opisnet.com