Malaysian government to begin revoking biodiesel permits; only 5 of 91 built; producers blame high palm oil prices

In Malaysia, the government said it would begin to revoke biodiesel plant permits after only five of the 91 approved plants had been built.

The government believes that producers have not taken the permitting process seriously, while producers believe palm oil prices have to climb down to $780 per metric ton before plants area feasible. Palm oil is traded as high as $921 per metric ton last month with the February delivery contract trading at $868.

Last month, Finland’s Neste Oil announced a plan to construct a 43m Mgy biodiesel plant in Singapore. The facility, scheduled for completion in 2010, will use palm oil certified by the Roundtable on Sustainable Palm Oil (RSPO). Estimated project cost is $814 million for the Juron Island facility.

Jurong Island is the petrochemical hub for Singapore and Southeast Asia in general. Two plants are currently in place, a Cremer facility capable of 200,000 tons and a joint venture between Wilmar and Archer-Daniels-Midland that has a capacity of 150,000 tons. Singapore is considered ideal for palm oil biodiesel because of its proximity to the feedstock plantations in Malaysia, Indonesia and Thailand as well as its world-class fuel terminal facilities.

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