Energy firms to jump-start Indonesia's renewables

China National Offshore Oil Corp. is one of 59 energy firms and institutions that signed preliminary agreements with Indonesia to jump-start the country's renewable energy sector.

Jan. 15, 2007

2 min read

Eric Watkins
Senior Correspondent

LOS ANGELES, Jan. 15 -- China National Offshore Oil Corp. is one of 59 energy firms and institutions that signed preliminary agreements with Indonesia to jump-start the country's renewable energy sector.

CNOOC may partner Jakarta-listed oil palm and tea plantations firm Sinar Mas Agro Resources & Technology and Hong Kong-based property and renewable energy projects developer HKC (Holdings) in a $5.5 billion venture to process crops into fuel.

A CNOOC spokesperson said the agreement was preliminary and that details about any potential investment will be subject to further negotiations.

Sinar Mas said the project, which involves production of biodiesel from crude palm oil and bioethanol from sugar cane or cassava, would be in Papua in eastern Indonesia and Kalimantan in northern Indonesia where the regional governments have reserved some 1 million hectares of land for the project.

Sinar Mas said the biofuel project would be developed in three phases over 8 years.

Other major deals include a $3 billion investment by Malaysia-based Genting Biofuels Asia and a $1 billion investment by a joint Indonesian-Malaysian venture.

Domestic financial institutions, including Bank Rakyat Indonesia, Bank Mandiri, Bank Bukopin, the West Sumatra regional development bank, and the North Sumatra regional development bank, have agreed to provide a total of Rp 50 trillion ($5.4 billion) in loans to support Indonesia's green energy fund.

The banks committed to loans of as much as Rp 25 trillion for plantation development and Rp 25 trillion for construction of processing plants.

Indonesia plans to designate up to 6.5 million hectares of uncultivated land for the development of biofuel-feedstock plantations in an effort to produce enough biofuel by 2010 to replace 10% of the country's oil-based fuel consumption.

The head of Indonesia's biofuel development committee said he expects the country to be able to produce 200,000 boe/d of biofuels by 2010.

Indonesia currently produces about 160,000 tonnes/year of biodiesel or bioethanol through the Eterindo Group, Bumi Asih and Platinum, and Mulindo Raya Industrial.

Contact Eric Watkins at [email protected].