9/2/06 KUALA LUMPUR (Reuters) - Malaysia's Kulim (Malaysia) Bhd said on Thursday it has teamed up with a German firm to set up two biofuel plants in Malaysia and Singapore to produce "green" fuel mainly for the European market.

The palm oil grower said the Singapore plant, to be built on the petrochemical hub of Jurong Island, would be the city-state's first biofuel facility.

The other plant will be built in the southern Malaysian state of Johor bordering Singapore. Kulim said in a statement that it was partnering Germany's CremerOleo GmbH & Co in the deal.

Both plants, costing 155 million ringgit ($41.6 million), will have a combined facility of 200,000 tonnes a year of methyl esters for biodiesel and glycerin as a by-product, it said.

Malaysia is the world's biggest producer of palm oil -- a feedstock for biodiesel. The government had said it hoped to capture at least 10 percent of the global biodiesel market which was expected to reach 10.5 million tonnes.

The European Union countries alone produced 1.9 million tonnes of biodiesel last year, Kulim said.