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Asia-Pacific's role in biofuels market.Petroleum Review With an almost insatiable demand for biodiesel in the US, Europe, Japan and Australia, the countries of south-east Asia are ideally situated and provisioned to meet that need, writes Brian Warshaw. Malaysia, Indonesia, Thailand and the Philippines produce the majority of the world's crude palm oil (CPO), with Malaysia and Indonesia alone providing 84% of the total. In June 2007, following a mission to Europe, Datuk Sabri Ahmad, Chairman of the Malaysian Palm Oil Board (MPOB), called on the industry to become more productive in order to meet the requirement for 30mn tonnes of vegetable oil that the region will require by 2010 to meet its biodiesel target of 10%. He said that there were only 1mn hectares of available land left, to add to the 4mn already under cultivation, on which to grow sustainable palms. Datuk's optimism is not shared by all the biodiesel producers. They fear that the industry is being made unviable by the changing relationship between the price of CPO and petroleum crude oil (PCO). In Malaysia, when biodiesel plants commissioned last year, and those due to come into production this year, were being planned, CPO was selling for around $450/t, while earlier this year June futures reached a peak of $807/t on the Bursa Malaysia Derivatives market. Meanwhile, PCO has remained at an average of $65/b, with a 2007 peak of $72/b. Proof of the problem is easy to see. Despite having been pre-commissioned, the 100,000-tonne SPC Biodiesel Malaysian plant will not open as planned, despite its total production capacity having been pre-sold. Australian owner Sterling Biofuels International was floated on the Australian Stock Exchange on 25 September 2006 at an opening selling price of A$1; eight months later its shares were available for A$0.285. Singapore has no CPO production of its own, but the country is a major draw for companies that import palm oil, process it and export the biodiesel. The German-based company Cremer Gruppe has built a 100,000 t/y facility to process its Nexsol brand of biodiesel; however, as a result of the current costings, it was expected to be operating at less than 50% of its capacity when it opened in July. Cremer Gruppe is also building a plant at Tanjung Langsat, Johore, Malaysia. Kenny Koh, head of Marketing for Cremer's Asian operation, explained: 'At the rate things are going, it would be difficult to run the plants. I would guess that everyone is in the same boat. The palm guys have moved the market so high that the palm oil alone is priced higher than diesel even without the processing costs.' Lereno Bio-Chem, which has plans for a 200,000-tonne biodiesel plant on Jurong Island, has recently announced that its intended September construction start has been delayed, without naming a new date.
The evidence points to a south-east Asian slow-down in new biodiesel development, and the probability that many of the facilities that have been completed will be operated at reduced capacity or even mothballed. This is happening despite an almost insatiable demand from the developed world.
Date: 15.08.2007 Leave your comment
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