Sinopec reportedly to invest $5 billion in biofuels in Indonesia
Sinopec, China's top oil company, reportedly will cooperate with an Indonesian enterprise to set up biofuel plants and to grow energy crops in Indonesia, with a major investment of US$5 billion. Indonesia's national news agency Antara reported about the project, which would become Sinopec's second large overseas biofuel investment.
The plants and plantations are set to be located in Indonesia's Papua and East Kalimantan regions, and will be used for extracting biodiesel from crude palm oil and jatropha curcas oil. Sinopec will cooperate with PT Puri Usaha Kencana to build the plants as well as to crop oil palm and Jatropha curcas. According to Al Hilal Hamdi, chairman of Indonesia's National Biofuels Task Force, the project is likely to begin this year.
Over the past years, China's state-owned oil company has hinted often at this possible mega-investment. But as oil prices temporarily declined, the issue went off the agenda. Now, with persistent high prices and the oil crisis being felt by ordinary Chinese, it is back.
In January 2007, another oil major, the China National Offshore Oil Corporation (CNOOC) signed a Memorandum of Understanding with the Indonesian government under which it intends to invest $5.5 billion in the development of the biofuel sector in Indonesia, announcing the establishment of 3 biodiesel processing plants in Kalimantan (earlier post).
For China, biofuels produced overseas are not so much seen as a way to reduce its transport sector's greenhouse gas emissions, but more as a matter of sheer energy security and access to affordable liquid fuel sources, crucial for its economy:
energy :: sustainability :: ethanol :: biodiesel :: biomass :: bioenergy :: biofuels :: palm oil :: jatropha :: Indonesia :: Sinopec ::
Besides Sinopec and CNOOC, several other Chinese state-owned and private enterprises have announced large biofuels investments in, amongst other countries, the Philippines, Malaysia, Indonesia, Mozambique and Congo. Most of these investments have gone unnoticed because China is quite discreet about them.
Sinopec is becoming a large player on the world's energy stage and is building its presence in Indonesia. In 2007, it was the successful bidder for the Indonesian National Petroleum Corp's residue hydrotreating catalyst project. The residue hydrotreating catalyst technology is used for the utilization and deep processing of low-grade or heavy crude oil.
Since 2006, Sinopec has speeded up its overseas investment. In 2006, it acquired six international refinery projects worth of US$3.08 billion. In December 2007, Sinopec signed agreement with the Brazilian government for the US$6.5 billion GASCAC gas pipeline project, which will be completed in five years. It is the largest overseas engineering service project of Sinopec Group by the end of 2007.
Other investments
Meanwhile, also in Indonesia, Bronzeoak from Britain plans to invest US$270 million to produce ethanol from sweet sorghum. Bronzeoak will cooperate with the Satria Group to build a factory and plantation in the regency of Belu and Central Timor in East Nusatenggara.
The Sampoerna Group for its part reportedly plans to break the ground to mark the construction of an ethanol plant in Wonogiri, Central Java, before the end of the first quarter of this year. Sampoerno is a leading tobacco producer.
Sustainability problems
Sinopec's plan could accentuate an increasingly heated issue in the biofuels debate, namely that of the 'displacement effect': a country like Indonesia would produce biofuels for exports to Europe, from existing plantations, which are seen as yielding climate friendly fuels under the new EU sustainability rules. While at the same time it would be producing fuels and food products from new plantations for export to non-EU countries, like China. If the latter plantations are based on deforestation, the EU's sustainability rules would have resulted in this displacement effect and would prove to fuel environmental damages.
It is too early to tell whether the effect will play out in this case, because details about Sinopec's plantation plans are unavailable. However, discussions about this theoretical problem will grow larger as more biofuel projects come on line in forest-rich tropical countries.
References:
China Knowledge: Sinopec to invest US$5 bln in Indonesian biofuel project [*cache] - January 24, 2008.
TradingMarkets: China's Sinopec to invest $5 bln on Indonesian biofuel project - January 22, 2008.
MarketWatch: Sinopec to reportedly invest $5 bln in Indonesia biofuel project - January 22, 2008.
PetrolWorld: Indonesia: Sinopec Investing us$5bn in Biofuel Project - January 22, 2008.
Biopact: CNOOC to build 3 biodiesel plants in West Kalimantan - May 07, 2007
The plants and plantations are set to be located in Indonesia's Papua and East Kalimantan regions, and will be used for extracting biodiesel from crude palm oil and jatropha curcas oil. Sinopec will cooperate with PT Puri Usaha Kencana to build the plants as well as to crop oil palm and Jatropha curcas. According to Al Hilal Hamdi, chairman of Indonesia's National Biofuels Task Force, the project is likely to begin this year.
Over the past years, China's state-owned oil company has hinted often at this possible mega-investment. But as oil prices temporarily declined, the issue went off the agenda. Now, with persistent high prices and the oil crisis being felt by ordinary Chinese, it is back.
In January 2007, another oil major, the China National Offshore Oil Corporation (CNOOC) signed a Memorandum of Understanding with the Indonesian government under which it intends to invest $5.5 billion in the development of the biofuel sector in Indonesia, announcing the establishment of 3 biodiesel processing plants in Kalimantan (earlier post).
For China, biofuels produced overseas are not so much seen as a way to reduce its transport sector's greenhouse gas emissions, but more as a matter of sheer energy security and access to affordable liquid fuel sources, crucial for its economy:

Besides Sinopec and CNOOC, several other Chinese state-owned and private enterprises have announced large biofuels investments in, amongst other countries, the Philippines, Malaysia, Indonesia, Mozambique and Congo. Most of these investments have gone unnoticed because China is quite discreet about them.
Sinopec is becoming a large player on the world's energy stage and is building its presence in Indonesia. In 2007, it was the successful bidder for the Indonesian National Petroleum Corp's residue hydrotreating catalyst project. The residue hydrotreating catalyst technology is used for the utilization and deep processing of low-grade or heavy crude oil.
Since 2006, Sinopec has speeded up its overseas investment. In 2006, it acquired six international refinery projects worth of US$3.08 billion. In December 2007, Sinopec signed agreement with the Brazilian government for the US$6.5 billion GASCAC gas pipeline project, which will be completed in five years. It is the largest overseas engineering service project of Sinopec Group by the end of 2007.
Other investments
Meanwhile, also in Indonesia, Bronzeoak from Britain plans to invest US$270 million to produce ethanol from sweet sorghum. Bronzeoak will cooperate with the Satria Group to build a factory and plantation in the regency of Belu and Central Timor in East Nusatenggara.
The Sampoerna Group for its part reportedly plans to break the ground to mark the construction of an ethanol plant in Wonogiri, Central Java, before the end of the first quarter of this year. Sampoerno is a leading tobacco producer.
Sustainability problems
Sinopec's plan could accentuate an increasingly heated issue in the biofuels debate, namely that of the 'displacement effect': a country like Indonesia would produce biofuels for exports to Europe, from existing plantations, which are seen as yielding climate friendly fuels under the new EU sustainability rules. While at the same time it would be producing fuels and food products from new plantations for export to non-EU countries, like China. If the latter plantations are based on deforestation, the EU's sustainability rules would have resulted in this displacement effect and would prove to fuel environmental damages.
It is too early to tell whether the effect will play out in this case, because details about Sinopec's plantation plans are unavailable. However, discussions about this theoretical problem will grow larger as more biofuel projects come on line in forest-rich tropical countries.
References:
China Knowledge: Sinopec to invest US$5 bln in Indonesian biofuel project [*cache] - January 24, 2008.
TradingMarkets: China's Sinopec to invest $5 bln on Indonesian biofuel project - January 22, 2008.
MarketWatch: Sinopec to reportedly invest $5 bln in Indonesia biofuel project - January 22, 2008.
PetrolWorld: Indonesia: Sinopec Investing us$5bn in Biofuel Project - January 22, 2008.
Biopact: CNOOC to build 3 biodiesel plants in West Kalimantan - May 07, 2007
1 Comments:
Guys, people are Freezing to death in China. The very last thing in the World they're interested in is Euro Sustainability rules.
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