INTERVIEW - Malaysia IOI Eyes Green Energy Expansion in Europe
Author: Anna Mudeva
Michael van Sallandt, manager of the firm's bulk oils Europe division, told Reuters in an interview the company expected demand for palm oil for the production of electricity and biofuels to rise in Europe in coming years.
"We're looking seriously at the area of biomass and biofuels," Van Sallandt said but declined to give details about specific projects.
"Palm oil demand is going up very steadily in Europe...and we expect that to continue. (Interest in) biomass and biofuels will cause additional demand but a lot will depend on EU policies and subsidies," he said.
Soaring crude oil prices have made biofuels produced from rape, soy and palm oil even more attractive in the EU, where tax incentives have already stimulated "green" energy production.
Rape oil is the preferred choice of the EU biodiesel industry because of its availability and quality, but fierce competition for oil from the food sector drove prices up sharply and energy producers have started looking at cheaper options like palm oil by-products.
Last month, Dutch firm Biox sealed two 10-year contracts with IOI and Malaysian Golden Hope Plantations to buy palm oil by-products to produce electricity.
Biox will build four power plants in the Netherlands, one of which will be constructed near IOI's new palm oil refinery at the Rotterdam port.
EUROPE'S BIGGEST REFINERY
Van Sallandt said the refinery, Europe's biggest, launched commercial operations last month and expected to supply one-third of its produce to "green" energy makers.
"The main part of our production is for the food and feed industry. Our main customers are in the Benelux, Germany and France," he said.
Hungry for a slice of Europe's huge vegetable oils market, IOI, which runs some 160,000 hectares of plantations, invested 40 million euros in the construction of the Rotterdam refinery earlier this year.
The plant has a capacity of about 900,000 tonnes a year.
"Realistically, we expect production next year to be about 500,000 to 600,000 tonnes but we are still unsure what will happen with the biofuel demand. Some new plants come onstream in late 2006, which could increase demand," Van Sallandt said.
European vegetable oil producers' and processors' federation Fediol forecast that about 20 percent of Europe's biodiesel, most of which is currently made from rapeseed oil, could come from palm oil in the next five years.
Biodiesel and biofuel capacity has been rising in Europe as governments try to reduce dependence on crude oil imports and cut greenhouse gas emissions.
The EU now imports about 3.5 million tonnes of refined and crude palm oil every year, chiefly from Malaysia and Indonesia, with one-third of the quantities shipped via Rotterdam.
This is set to increase by at least 1 million tonnes next year mainly to cover the needs of the two refineries at Rotterdam. Malaysian Kuok Oils and Grains is also building a 300,000-tonnes palm oil refinery.