23-11-05 Leading Malaysian palm oil producer IOI Group is considering expanding in Europe’s growing “green” energy market, its Dutch-based European arm Loders Croklaan said.
Michael van Sallandt, manager of the firm’s bulk oils Europe division, said the company expects 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. “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 (European Union) policies and subsidies,” he said.

Soaring crude oil prices have made biofuels produced from rape, soya 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 fromthe food sector drove prices up sharply and energy producers have started looking at cheaper options like palm oil by-products.

In October, Dutch firm Biox sealed two 10-year contracts with IOI and 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.
Van Sallandt said the refinery, Europe’s biggest, launched commercial operations in October 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 ha of plantations, invested EUR 40 mm in the construction of the Rotterdam refinery earlier this year. The plant has a capacity of about 900,000 tpy.
“Realistically, we expect production next year to be about 500,000 to 600,000 tons, 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 producer and processor federation Fediol forecast that about 20 % 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 mm tons of refined and crude palm oil every year, mainly from Malaysia and Indonesia, with one-third of the quantities shipped via Rotterdam. This is set to increase by at least 1 mm tons next year, mainly to cover the needs of the two refineries in Rotterdam.
Malaysian Kuok Oils and Grains is also building a 300,000-ton palm oil refinery.