January 29, 2020 / 7:53 AM / 25 days ago

Indonesia's Pertamina ends deal with Italy's Eni for palm oil fuel project -Pertamina CEO

JAKARTA, Jan 29 (Reuters) - Indonesia state energy company PT Pertamina has ended a partnership with Italian oil, gas and power firm Eni SpA to process palm oil into fuel, Pertamina's chief executive told a parliamentary committee on Wednesday.

Pertamina's Nicke Widyawati said during the hearing that Eni required internationally recognised certification for palm oil, in line with European Union moves to curb the use of palm oil as a transport fuel, even though the oil would have been processed in facilities located in Indonesia.

Pertamina and Eni signed a head joint venture agreement last year to build a refinery in Indonesia that would produce fuel completely derived from crude palm oil.

"We have decided to terminate this partnership and replace it with partnership with UOP from the United States for support in technology," Widyawati said, referring to an oil and gas engineering arm of U.S. conglomerate Honeywell International Inc .

She didn't disclose technical or financial details of the dissolution of the Eni partnership, nor of the new accord with UOP.

Eni and Honeywell UOP didn't immediately respond to Reuters e-mails requesting comment sent outside usual business hours.

The European Commission concluded in March that palm oil causes excessive deforestation and should not count as a renewable source of energy, and will effectively be phased out as fuel for transport between 2023 and 2030.

Pertamina is building its new "green diesel" refinery in Plaju, in South Sumatra province, with planned output capacity of 1 million kilolitres (KL) per year and a target of commencing operations in 2024.

Indonesia is the world's top palm oil producer and President Joko Widodo wants the country to optimise the use of palm-based fuel to curb energy imports, while increasing the consumption of the vegetable oil. (Writing by Fransiska Nangoy; Editing by Kenneth Maxwell)

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