BEIJING, June 19 (Bernama) -- The viability of palm oil as a clean alternative fuel has prompted several mainland China firms to seek palm oil waste from Malaysia to produce biodiesel amid spiking crude petroleum prices.

This can well be another huge potential revenue earner for Malaysia as energy-thirsty China and its galloping economy has begun developing its biodiesel sector.

According to state media, China produced 60,000 tonnes of biodiesel last year but within the next few years, the sector is expected to accelerate because the goal is to produce 2 million tonnes by 2010.

Five companies have approached the Malaysian External Trade Development Corp (Matrade) office here to source for palm oil waste. Two of them are already in talks with Malaysian suppliers.

"This is the first time we had received queries from Chinese companies and agents asking to buy palm oil waste for biodiesel.

"They are looking for long-term contracts and are willing to pay between US$200 to US$250 (US$1=RM3.61 per tonne.

"The companies are all from the energy industry but did not wish to be identified pending negotiations for the purchase," said Matrade commissioner Abu Bakar Yusof.

Initial demand from the five enquiries alone totalled between 200,000 and 250,000 tonnes a year and if met, the exports could fetch up to US$62.5 million.

Spiralling crude petroleum prices and pollution concerns have heightened the search and development of alternative energy especially renewable resources around the world.

Malaysia, currently the world's biggest palm oil producer, has also embarked on using the commodity to produce environmentally-friendly fuel. It recently launched Envo Diesel, a biofuel mixture of 5 per cent processed palm oil and 95 per cent petroleum diesel to be introduced for government vehicles from next year.

"China is already a major buyer of Malaysian palm oil used mainly by its food industry. Last year, it bought close to 3 million tonnes of Malaysian crude palm oil worth US$1.2 billion, or 75 per cent of palm oil imported into China," said Abu Bakar.

The commodity makes up 12.6 per cent of Malaysian exports to China last year.

China's import of palm oil had risen in the first quarter this year by almost 20 per cent to 899,000 tonnes after import quotas were abolished.