BP in Talks to Enter Biofuel Business

Ika Krismantari

The Jakarta Post - Business and Investment - June 07, 2007

British-based oil giant BP Plc. is currently in talks with a local company to jointly set up a biofuel business in Indonesia so as to benefit from the country's ambitious alternative energy program.

Evita H. Legowo, the first secretary of the National Biofuel Development Committee, said Wednesday that BP was looking to enter into a partnership with local agribusiness firm Rajawali Nusantara Indonesia to establish a biofuel plant.

"With BP's cutting-edge technology, capital and human resources, the company is well-placed to enter the country's biofuel sector," Evita said after accompanying BP biofuel division president Philip New to a meeting Wednesday with the Energy and Mineral Resources Minister Purnomo Yusgiantoro.

Even though there was no information available as yet on the possible size of the investment, Evita said that BP was exploring the possibility of investing in both the upstream and downstream ends of the business, using jatropha, sorghum and sugarcane as feedstock.

BP spokesperson Nico Kanter said the company had yet to calculate the total investment required as it was still engaged in preliminary talks.

He said that the company was aware of Indonesia's great potential for the development of eco-friendly fuels as the country had a vast area and abundant natural resources.

Indonesia has embarked on an ambitious biofuel program that has already attracted more than US$17 billion in foreign and domestic investment.

According to the government's road map for biofuel development, Indonesia's demand for biofuel is expected to reach 5.29 million kiloliters by 2010, about 9.84 million kiloliters by 2015 and 22.26 million kiloliters by 2025.

The country is expected to produce 600,000 tons of biofuel this year. Among the major producers are local companies, including PT Wilmar, with a production of 350,000 tons per year, Eterindo with 120,000 tons per year and PT Sugar Group with 70,000 tons per year.

China's biggest oil firm, CNOOC, is currently making preparations for the construction of three biodiesel plants to be built at a cost of $5 billion in West Kalimantan this year.

Malaysia-based Genting Biofuels Asia has also pledged to invest $3 billion in the Indonesia biofuel sector.

In addition, three Austrian companies -- Energea, BioDiesel International and the Christof Group -- said recently that they were interested in building biodiesel refineries in Indonesia, and have been involved in discussions with potential Indonesian partners.

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