JAKARTA, July 24 (Reuters) - Indonesia, the world's greatest palm oil producer, is testing fuel with a view to increasing to 40% from 35% the share of palm-oil blended into biodiesel next year, the energy ministry said.


If executed, the B40 required could increase biodiesel intake to approximately 16 million kilolitres (KL) next year, the ministry stated, from 13 million KL estimated to be consumed in 2024.


"We hope the trials might be completed in December, so that complete execution of B40 could be performed in 2025," energy ministry senior main Eniya Listiani Dewi said in a declaration on Tuesday.


The Indonesian Biofuel Producers Association (APROBI) said the market had the capability to fulfill B40 need, with installed capacity expected to rise to 20 million KL every year next year from 18 million KL now.


"However we will need more raw products to fulfill B40 demand," Ernest Gunawan, the secretary general of APROBI told Reuters on Wednesday.


The biodiesel industry would require 13.9 million metric lots of crude palm oil to produce 16 million KL biodiesel next year, from the approximated 11 million heaps needed this year, he added.


Indonesia's biggest palm oil association GAPKI said a decline in exports indicated there would be sufficient raw materials to provide the B40 required in the meantime.


But the market would require to examine "which one would be better", GAPKI chairman Eddy Martono stated, referring to the possibility a boost in exports would make supplying the domestic market less practical.


Indonesia's palm oil output is approximated to reach 54.4 million heaps in 2024, a 2.26% increase from in 2015, while exports are expected to decrease by 2.47% to 29.5 million tons as domestic usage rose, driven by biodiesel required.


The ministry had actually checked the biodiesel, combined with 40% of palm oil, on a train for the very first time earlier this week, while planning to test the B40 mix on agriculture equipment, power plants and in the shipping industry, it said. (Reporting by Bernadette Christina and Dewi Kurniawati; Writing by Stanley Widianto; Editing by John Mair, Savio D'Souza and Barbara Lewis)