Jakarta. Indonesia continues its research and trial on a diesel fuel replacement, aiming for nationwide usage of B40, a mix of 40 percent palm-oil based biofuel and diesel fuel by next year, the Energy and Mineral Resources Ministry said on Thursday. 

The B40 is part of a medium-term strategy to reduce the country's dependence on expensive import of fossil fuel. The program will also ensure steady demand for crude palm oil (CPO) if the European Union goes ahead with its plan to ban import of palm-oil based biofuel in the next few years. 

Indonesia released an earlier version of the fuel mix, the B20, early last year and made it a mandatory substitute for regular diesel fuel. The upgraded B30 program was just released last month. 

The B40 has already had a trial run with an official release slated for next year. 

Energy and Mineral Resources Minister Arifin Tasrif said on Thursday that some engines encountered problems with their filter during the trial. However, the minister assured this was the natural effect of the rust-removing biofuel. After some time the engine would become cleaner and run more smoothly.

Djoko Siswanto, the director general of oil and gas at the ministry, said the government's main challenge now is to manage the logistics and supply chain to ensure a constant stream of the B40.

"We are selecting the most suitable [sources] for the green fuel CPO and identifying the best refineries," he said. 

Waiting for new refineries to be built to produce biofuel in large enough quantity to replace regular diesel would take too long. So for now the government is relying on existing refineries close to CPO sources to produce the biofuel, Djoko said. 

The biofuel program is expected to cut $4.5 billion in diesel fuel import this year. This expected to improve the country's trade balance which went down into the red last year. 

President Joko "Jokowi" Widodo also said the biofuel program provides a cushion for Indonesia in the face of EU's palm oil restrictions. 

"The European Union wants to ban our palm oil, but we are calm. We'll use it ourselves. Why should we export there?" Jokowi said on Thursday.

Today, Indonesian palm oil accounts for about half of Europe's CPO market. The EU imports an average of 3.6 million tons of Indonesian palm oil worth 2.3 billion euros ($2.6 billion) every year in the past five years.

"We are implementing a new business strategy so we won't have to depend on other countries again," Jokowi said.