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economic life
economic life
span: 25
span: 25
30 years
30 years
slightly affected
slightly affected
by season and
by season and
weather
weather
harvested
harvested
throughout the year
throughout the year
Advantage
Advantage
.. palm oil!
.. palm oil!
9 9
GLOBAL SCENARIO ON
GLOBAL SCENARIO ON
OILS AND FATS
OILS AND FATS
10 10
Soyabean Oil
23%
Rapeseed Oil
12%
Sunflower Oil
7%
Animal Oils &
Fats
15%
Others
16%
Palm Oil
27%
Source: Oil World
WORLD OILS & FATS PRODUCTION, 2008
(160.5 MILLION TONNES)
11 11
Palm Oil
54%
Soyabean Oil
17%
Sunflower Oil
6%
Palm Oil Palm Kernel Oil Soyabean Oil Sunflower Oil
Rapeseed Oil Coconut Oil Other Veg. Oils Animal Oils/ Fats
WORLD OILS & FATS EXPORT, 2008
(60.79 MILLION TONNES)
Source: Oil World
12 12
Rapeseed Oil
4%
Soyabean Oil
17%
Palm Oil
55%
Palm Oil Palm Kernel Oil Soyabean Oil Sunflower Oil
Rapeseed Oil Coconut Oil Other Veg. Oils Animal Oils/ Fats
WORLD OILS & FATS IMPORT, 2008
(61.20 MILLION TONNES)
Source: Oil World
13 13
17.7
19.3
1.2
0.9 0.8
0.4 0.4
2.4
0
5
10
15
20
25
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Million Tonnes
Source: Oil World
WORLD MAJ OR PRODUCERS OF PALM OIL,
2008 (43.1 MILLION TONNES)
14 14
WORLD MAJ OR EXPORTERS OF PALM OI L,
2008 (33.62 MILLION TONNES)
- 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00
MALAYSIA
Indonesia
Papua New Guinea
Colombia
Singapore
Cote dIvoire
Hong Kong
Others
Million Tonnes
Source: Oil World
15 15
Others
36%
Bangladesh
3%
China, P.R.
17%
EU
14%
India
16%
Pakistan
5%
CIS
4%
USA
3%
Egypt
2%
WORLD MAJ OR I MPORTERS OF PALM OI L,
2008 (MI LLI ON TONNES)
Source: Oil World
16 16
16
Premier position of palm oil in the world
Premier position of palm oil in the world
trade is largely attributed to its
trade is largely attributed to its
competitive position in the market place
competitive position in the market place
A position that has been defined by palm oil
A position that has been defined by palm oil
s:
s:
assured supply &
assured supply &
availability
availability
product diversity &
product diversity &
versatility
versatility
competitive market
competitive market
prices
prices
superior product
superior product
performance
performance
Competitive
Competitive
production cost
production cost
wholesomeness &
wholesomeness &
nutrition values
nutrition values
17 17
OVERVIEW OF
OVERVIEW OF
MALAYSIAN PALM OIL
MALAYSIAN PALM OIL
INDUSTRY
INDUSTRY
18 18
MALAYSIA : OIL PALM PLANTED AREA
MALAYSIA : OIL PALM PLANTED AREA
(1975
(1975
-
-
2008)
2008)
-
-
HECTARES
HECTARES
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
M
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l
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H
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c
t
a
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e
s
1975 1980 1985 1990 1995 2000 2005 2006 2007 2008
Mature Immature Total
Occupied 4.49 mil. hectares in 2008 which is 20% of total Malaysia land area
Forest Areas in Selected Countries
Country % Forest
Area
Total Forest
Area (mil. ha)
Total Land
Area (mil. ha)
France 28.3 15.55 55.01
Sweden 66.9 27.53 41.16
Germany 31.7 11.08 34.9
Malaysia 63.6 20.89 32.86
UK 11.8 2.85 24.09
Brazil 57.2 477.7 835.56
Argentina 12.1 33.02 273.67
USA 33.1 303.09 915.89
Denmark 11.6 0.5 4.31
Source: FAO, Global Forest Resources Assessment, 2005
20 20
0
5
10
15
20
25
1975 1980 1985 1990 1995 2000 2005 2006 2007 2008
T
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s
/
H
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FFB CPO Palm Kernel
MALAYSIA : FFB, CPO & PALM KERNEL YIELD
MALAYSIA : FFB, CPO & PALM KERNEL YIELD
(1975
(1975
-
-
2008)
2008)
TONNES/ HECTARE
TONNES/ HECTARE
20.18
4.08
1.05
21 21
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
M
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T
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s
1985 1990 1995 2000 2005 2006 2007 2008
CPO PPO CPKO PPKO PKO PKC
MALAYSIA : EXPORT OF OIL PALM PRODUCTS
(1985-2008) MILLION TONNES
90% exported to
150 countries
PKO = CPKO + PPKO Export of oleochemicals in 2008 : 2.075 mil.T
22 22
MALAYSIA : EXPORT OF PALM OIL TO MAJ OR
DESTINATIONS (2008/ 2007) MILLION TONNES
COUNTRY COUNTRY 2007 2007 2008 2008 % Diff % Diff
China P.R. China P.R. 3.84 3.84 3.79 3.79 - -1.30 1.30
EU EU 2.06 2.06 2.05 2.05 - -0.49 0.49
Pakistan Pakistan 1.07 1.07 1.28 1.28 19.63 19.63
U.S.A. U.S.A. 0.79 0.79 1.05 1.05 32.91 32.91
I ndia I ndia 0.51 0.51 0.97 0.97 90.20 90.20
J apan J apan 0.53 0.53 0.55 0.55 3.77 3.77
Bangladesh Bangladesh 0.15 0.15 0.27 0.27 80.00 80.00
U.A.E. U.A.E. 0.36 0.36 0.36 0.36 0.00 0.00
Vietnam Vietnam 0.25 0.25 0.20 0.20 - -20.00 20.00
South Africa South Africa 0.25 0.25 0.16 0.16 - -36.00 36.00
Iran Iran 0.23 0.23 0.26 0.26 13.04 13.04
Others Others 3.71 3.71 4.47 4.47 20.49 20.49
TOTAL 13.75 15.41 12.07
23 23
MALAYSIA : ANNUAL CLOSING STOCK OF OIL
PALM PRODUCTS (1988 2008) - TONNES
0.0
0.5
1.0
1.5
2.0
2.5
M
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T
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Palm Oil Palm Kernel Oil Palm Kernel
Secure supply of palm oil with
> 1-2 million tonnes of stock
24 24
DEVELOPMENT OF MALAYSIAN
BIODIESEL INDUSTRY
25 25
Development of
Development of
MPOB Palm Biodiesel Programme
MPOB Palm Biodiesel Programme
Lab scale R&D Lab scale R&D 1982 1982
Pilot plant built and Pilot plant built and
commissioned commissioned 1985 1985
Produces palm biodiesel for Produces palm biodiesel for
engine testing and market engine testing and market
seeding seeding
Preliminary Field Trial Preliminary Field Trial
(July 1984 (July 1984 May 1985) : 8 taxis May 1985) : 8 taxis
Exhaustive Field Trial (Phase I): Exhaustive Field Trial (Phase I):
1986 1986- - 1989 : 31 diesel engines 1989 : 31 diesel engines
of different makes of different makes
Exhaustive Field Trial (Phase II): Exhaustive Field Trial (Phase II):
1990 1990 1994: 36 buses 1994: 36 buses
Fully established as diesel Fully established as diesel
substitute in 1995 substitute in 1995
MPOB Palm Biodiesel Pilot Plant
26 26
Palm Biodiesel (Methyl Esters)
Palm Biodiesel (Methyl Esters)
RBD Palm Oil
Methyl Esters
RBD Palm Olein
Methyl Esters
Crude / Distilled Palm
Oil Methyl Esters
Winter Grade Palm
Biodiesel (CFPP -21C)
27 27
Palm Biodiesel from Other Feedstock
Palm Biodiesel from Other Feedstock
(Used Frying Oil, Residual Oil from SBE)
(Used Frying Oil, Residual Oil from SBE)
28 28
SUMMER GRADE SUMMER GRADE
PALM BI ODI ESEL PLANT PALM BI ODI ESEL PLANT
(Capacity : 60,000 Tonnes/ Year) (Capacity : 60,000 Tonnes/ Year)
WINTER GRADE WINTER GRADE
PALM BI ODI ESEL PLANT PALM BI ODI ESEL PLANT
(Capacity : 30,000 Tonnes/ Year) (Capacity : 30,000 Tonnes/ Year)
29 29
ENERTECH BIODIESEL PLANT,
ENERTECH BIODIESEL PLANT,
SOUTH KOREA (2006/07)
SOUTH KOREA (2006/07)
Overview of Biodiesel Plant
Front view of Biodiesel Plant
30 30
NEW BIODIESEL CO. LTD., THAILAND
NEW BIODIESEL CO. LTD., THAILAND
(2008/09)
(2008/09)
31 31
The National Biofuel Policy launched in
March 2006.
The Policy envisions :-
Use of environmentally friendly,
sustainable and viable sources of energy
to reduce the dependency on depleting
fossil fuels,
Enhanced prosperity and well-being of
all the stakeholders in the agriculture
and commodity based industries
through stable and remunerative prices.
Five (5) strategic thrusts :-
Thrust 1: Biofuel for Transport
Thrust 2: Biofuel for Industry
Thrust 3: Biofuel Technologies
Thrust 4: Biofuel for Export
Thrust 5: Biofuel for Cleaner
Environment
NATIONAL BIOFUEL POLICY
32 32
The Act was gazetted on 1
st
November 2008.
To regulate and ensure orderly development of the
biofuel industry :-
prescribing the type of biofuel
percentage blending
licensing activities related to biofuel and other
related matters
mandatory blending of PME/ olein with diesel for
local use
The Malaysian Standard on Palm Methyl Esters MS
2008:2008 (similar to EN 14214 / ASTM D6751) was
published in November 2008.
MALAYSIAN BIOFUEL INDUSTRY ACT
33 33
The introductory phase of implementation of mandatory use
of palm biodiesel started with B5 by Government
Departments on 3
rd
February 2009.
Government Departments involved in the B5
implementation:-
Armed Forces (ATM)
Kuala Lumpur City Hall (DBKL)
Implementation of Mandatory Use of
Palm Biodiesel in Malaysia
Govt.
Department
No. of
Vehicles
Volume of B5 Usage PME Used for B5
Mil. Litres Tonnes Litres Tonnes
ATM 3,000 2.877 2,446 143,871 127
DBKL 900 1.168 993 58,422 51
Total 3,909 4.045 3,439 202,293 178
B5 Usage by Govt. Departments (3
rd
Feb 30
th
Sep 2009)
Source : Petronas
34 34
September 2009
Implementation Phase No.
Capacity
(Mil. T/ Year)
In Operation 14 1.87
Completed Construction 5 0.25
Under Construction 11 1.11
Pre-Construction / Planning 58 6.97
Total Approved 91 10.20
STATUS OF
MALAYSIAN BIODIESEL INDUSTRY
35 35
2006 * 2007 2008 2009 **
Palm Oil Utilized
for Biodiesel 55,399 128,194 188,683
182,381
Production 54,981 129,715 171,555 176,098
Import NIL NIL NIL NIL
Consumption NIL NIL NIL NIL
Export 47,986 95,013 182,108 190,612
* Aug - Dec 2006
** J an - Sep 2009
MALAYSIAN BIODIESEL INDUSTRY:
PRODUCTION AND EXPORT (2006-2009)
36 36
MAJ OR EXPORT MARKET OF PALM BIODIESEL
MAJ OR EXPORT MARKET OF PALM BIODIESEL
(2006
(2006
-
-
2009)
2009)
-
50,000
100,000
150,000
200,000
250,000
M
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37 37
MALAYSIA: FEEDSTOCK USED FOR
PALM BIODIESEL PRODUCTION
RBD Palm Oil
49%
CPO
26%
RBD Palm Stearin
16%
RBD Palm Olein
1%
PFAD
1%
Others
7%
38 38
ISSUES AND CHALLENGES
39 39
Major factors influence biodiesel viability:
i. Feedstock prices
- price of CPO
- price of methanol
During high feedstock prices, companies have to cut production
or wait for feedstock prices to moderate. Some companies have
no choice but to run their plants to honour old export contracts.
Companies can mitigate the situation by:-
- seeking cheaper alternative feedstock, (e.g. RBDPS)
- take advantage of forward pricing when favourable
ii. Biodiesel export prices
- High feedstock prices coupled with unmatched rise in
biodiesel export prices squeeze producers profit margins.
iii. Biodiesel export situation
- e.g. US Splash & dash (subsidy US$300/ tonne) - importers
willing to buy at higher price.
- Sustainable PME Demand would improve PME export
market.
* Biodiesel plant viability improves with integration of phytonutrients
production (vitamin E & carotene).
BI ODI ESEL BUSI NESS VI ABI LI TY
40 40
1. Technological Challenge
Meeting EN 14214/ ASTM D 6751 specification e.g. cold soak
High CFPP.
2. Environmental Challenge
Threats, especially from EU questioning sustainability of palm oil
production for biodiesel
Allegations of destruction of orang utans, rainforests and loss of
biodiversity
Allegations that development of peatland gives net emission of GHG
Food vs. Fuel debate
3. Market Risks
Fluctuating Crude Oil & CPO prices
Cheaper sources of raw material-J atropha ??
Change in Specification
Overcapacity-dumping of Prices
Foreign Exchange Risk
4. Trade Barriers
ISSUES / CHALLENGES ON PALM BIODIESEL
41 41
1,000
1,250
1,500
1,750
2,000
2,250
2,500
2,750
3,000
3,250
3,500
3,750
4,000
4,250
4,500
4,750
A
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2006 2007 2008 2009
RM/Tonne
-
5,000
10,000
15,000
20,000
25,000
30,000
Tonnes
PME Production (Tonnes) PME FOB PME Cost (CPO)
Monthly Biodiesel Production Viability
(August 2006 - September 2009)
Production Not Viable
-honour old contracts
Production Viable
Production Viable Production Not Viable
-honour old contracts
42 42
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
2008 2009
US$/tonne
SME PME RME
PME normally at price discount to SME and RME because of relatively low palm
feedstock prices. In September 2009, the PME discount against SME and RME was
US$55 and US$168 per tonne respectively.
However, export of PME affected by subsidized export of biodiesel by US and
sustainability criteria in EU.
Source : Kingsman
Price Competitiveness of PME Against SME and RME
(CIF Europe) US$/ Tonne
The Way Forward
The Way Forward
(1) (1)
Vertical Integration of Palm Biodiesel
Vertical Integration of Palm Biodiesel
Production
Production
(2) (2)
Production of Value
Production of Value
-
-
Added Products
Added Products
from Palm Biodiesel
from Palm Biodiesel
(3) (3)
Addressing sustainable/environmental
Addressing sustainable/environmental
issues of palm biodiesel production
issues of palm biodiesel production
(1)
(1)
Vertical Integration of Palm Biodiesel
Vertical Integration of Palm Biodiesel
Production
Production
More efficient
More efficient