7/1/06 JAKARTA (Reuters) - Indonesia's government plans to develop 3 million hectares of palm oil plantations in the next five years to meet increasing demand for biofuel as an alternative source of energy, the agriculture minister said on Wednesday.
 

Anton Apriyantono said two million hectares will be developed on the Kalimantan side of Borneo island and the rest in other parts of Indonesia.
The government said last year it will develop a new palm oil plantation in Kalimantan near the border with Malaysia. Covering an area of 1.8 million hectares, it has the potential to be the world's biggest palm oil plantation.

"The government targets to develop three million hectares in new palm oil plantations," Apriyantono told reporters.

Biofuels are taking on renewed global importance as countries seek to substitute the soaring price of conventional oil and also cut hazardous emissions. Palm oil's emergence in the market comes decades after the introduction of ethanol, made from sugarcane, and other additives.

Analysts say the biofuel push could be the biggest driver of growth in demand for vegetable oils, especially as palm oil is the cheapest vegetable oil and the easiest to convert into fuel.

Indonesia is the world's second-largest palm oil producer and exporter after Malaysia.