The companies are Thaksin Palm (1978) Co Ltd and Bio Energy Plus Co Ltd.

Caretaker Energy Minister Viset Choopiban said after the signing ceremony the project would lead to manufacturing projects with a total production of 500,000 litres of biodiesel per day.

The Kingdom's current capacity for producing biodiesel from used vegetable cooking oil, stearin and crude palm oil is 350,000 litres per day, or 10.5 million litres per month.

He said 35 service stations owned by PTT Plc and Bangchak Petroleum Plc (BCP) currently sold 113,000 litres of biodiesel per day, or 3.4 million litres per month.

PTT and BCP plan to expand the number of service stations selling biodiesel to 200 across the country this year.

Viset said the Energy Ministry planned to promote biodiesel production in 70 communities by the end of the year, each with a production capacity of 7,000-21,000 litres per day.

With government support, local people will be urged to produce biodiesel from local raw materials like used cooking oil, palm oil and a locally grown plant called the physic nut (Jatropha curcas). Viset said it was envisaged this biofuel would replace about 2 million litres of diesel used in the agricultural sector annually.

The joint-study contracts signed by PTT yesterday provide for the investigation of two biodiesel production projects. The one with Thaksin Palm envisages a production capacity of 300,000 litres per day, while the one with Bio Energy Plus plans to make 200,000 litres per day. Palm oil will be used as the main feed stock for both. The first study is expected to be completed early next year and the second in 2008.

In addition, Viset said PTT's oleochemical subsidiary, Thai Oleochemical Ltd (TOL), was expected to begin producing biodiesel commercially in the third quarter of next year, with a production capacity of 600,000 litres per day.

The PTT group, therefore, aims at producing more than 1.1 million litres per day, enabling nationwide distribution and encouraging other private fuel retailers to shift to biodiesel.

Viset said he was confident the commercial development of biodiesel would accelerate and lead to a stable biodiesel industry in Thailand. PTT projects will also serve as an example and provide guidelines for other private investors.

The project will also help create price stability for domestic palm-oil producers in the short term and attract more farmers to grow palms. The Agriculture Ministry has set a planting target of 640,000 hectares of new palm-oil plantations by the end of 2009.

The project is also expected to boost the production of high-value products from the oleochemical industry.

PTT president Prasert Bunsumpun said the studies of producing methyl ester from palm oil, to be used as feed stock for biodiesel production, had the potential to reduce oil imports, minimise problems with air pollution and boost farmers' incomes.

He said PTT had continuously supported the development of biodiesel projects. The company has been involved in developing the biodiesel production plant of its TOL subsidiary, with production expected to begin in the third quarter of next year.

Furthermore, PTT also has long-term plans to develop a fully integrated biodiesel project starting from seeding, planting and managing a complete cycle "from downstream to upstream". The company will also expand into related businesses, in order to provide a model for biodiesel development in Thailand.

Prasert said that to achieve this, PTT was joining with the Charoen Pokphand Group in a study project.

Watcharapong Thongrung

The Nation