03/05/2010 (Bloomberg) - Brazil’s Petroleo Brasileiro SA and Portugal’s Galp Energia SGPS plan to invest $530 million to produce biodiesel for the European market.

The companies will produce 300,000 metric tons of palm oil in Brazil and 250,000 tons of biodiesel in Portugal, starting in 2015, Petrobras said in a Brazilian regulatory filing today. The palm oil will be used as feedstock for the Portuguese unit, Petrobras said.

Brazilian President Luiz Inacio Lula da Silva last year urged state-run Petrobras to seek other sources of biodiesel and reduce reliance on soybeans. Biodiesel, which is mainly made from soybeans in Brazil, can also be derived from castor beans, sunflower seeds and other vegetables.

Petrobras and Galp will each make half of the necessary investments in the project, Petrobras said.