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335636

UPDATE 2-Indonesia sees higher crude oil price boosting bio-content in fuel

(Adds palm oil fund comments, details)

By Bernadette Christina

NUSA DUA, Indonesia, Nov 3 (Reuters) - The stronger price of crude oil is making it more feasible to use a higher mix of bio-content in fuel in Indonesia, a senior cabinet minister said on Thursday, as the country considers raising its mandatory 30% mix of palm oil in biodiesel.

The cost of producing biodiesel is cheaper than fossil diesel fuel at the moment, Coordinating Minister for Economic Affairs Airlangga Hartarto told an industry conference.

Indonesia, which is the world's biggest palm oil producer, is currently conducting a road test for biodiesel with 40% palm oil content, known as B40.

"The effort to substitute fossil fuel with biodiesel, and green fuel and petrochemical with palm-based oleochemical is a strategy that will make it more feasible for the palm oil industry to maintain prices," Airlangga told participants of the Indonesia Palm Oil Conference in Bali.

This week, an energy ministry official said that the B40 road test is entering the last 6,000 km (3,728 miles) distance of it 50,000 km target and trial results could be completed in the next two weeks.

The government has not made any decision on when the B40 mandate would be implemented, deputy economic coordinating minister Musdhalifah Machmud, said on the sidelines of the conference.

Eddy Abdurrachman, chief executive of palm oil fund BPDPKS, said consumption of palm oil-based fuel could increase to 15 million kilolitres (KL) a year when B40 is introduced, an increase on the 11.15 million KL set to be consumed this year under the B30 mandate. (Reporting by Bernadette Christina Munthe Writing by Fransiska Nangoy Editing by Ed Davies)

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