KUALA LUMPUR, May 17 (Bernama) -- There is a bright future for Malaysia'soil palm biofuel in Europe against the rising world oil price, said theParliamentary Secretary for the Ministry of Plantation Industries andCommodities, Ng Lip Yong.

In addition, the European countries are also advocating the use of biofuelor biodiesel to cut down environmental pollution, he said.

Currently, Europe uses biofuel from rapeseed, which costs US$659 per tonne(US$1=RM3.80), which is much more costlier than the price of palm oilwhich is US$452 per tonne.

"Compared with rapeseed, palm oil is cheaper and it can be produced inlarge quantities," Ng told reporters at the Parliament lobby here Tuesday.

Malaysia produces about 13 million tonnes of palm oil a year, which is 90percent of the world's production.

Ng said that the Malaysian Palm Oil Board (MPOB) had successfully producedbiofuel suited to cold climate, an important factor to penetrate theEuropean market.

Besides this, the production of rapeseed would not be sufficient to meetthe demand for biofuel in Europe by 2010 where its usage has been expandedto vehicles.

As a pioneering project towards biofuel, Ng said a German rail companywhich was supplied with 35 tonnes of the palm oil based biofuel, hadreported satisfaction with the fuel's performance.

"Indeed, the company is ready to order 500,000 tonnes if Malaysia cansupply it," he said.

On the production of biofuel commercially, Ng said MPOB was planning tobuild a biodiesel plant with a production capacity of 60,000 tonnes inNilai, Seremban costing RM40 million. It is expected to start operationsin 2007.

He said that several local companies had also expressed interest to set upbiofuel plants in view of the high demand for biofuel overseas.

Earlier at the Dewan Negara sitting today, Ng, responding to a questionfrom Senator Datuk Dr Chin Fook Weng, said that the price of palm oil, atRM1.40 per litre compared with RM5 for a litre of diesel in Europe, wouldbe a factor in the high demand for the commodity. "We need to look beyondwhat has been achieved at the moment. The country's palm oil industry isnot only involved in the production of food and non food products, butalso in the production of fuel, which is biofuel," Ng said.

With the price of petroleum hitting US$55 per barrel, awareness has alsoincreased on the huge implication for the lower priced palm oil, he added.

-- BERNAMA