mpob delegation indonesia
TRANSCRIPT
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Presentation to Mr. Benny Wahyudi,
Director-General of Chemical,Agriculture and Forestry-Based Industry,Ministry of Industry and Trade Indonesia on
Malaysia Indonesia Collaboration
3 February 2005
Malaysian Palm Oil Board (MPOB)Ministry of Plantation Industries and Commodities
Malaysia
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MPOB DELEGATION
Dr Mohd Basri WahidDeputy Director-General I (R&D)
Dr Choo Yuen MayDirector, Engineering and
Processing Division
Dr Hj Ahmad HitamSenior Research Fellow,Biology Division
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PALM OIL AS RENEWABLESOURCE OF FOOD, NON-FOOD
AND BIOFUEL
VISION OF PALM OIL
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Indonesia Malaysia Collaboration
To work out a consensus scheme for palmoil supply rationalisation, i.e. price controlmechanism
To study the possibility of implementationof MPOB Leverage Model in Indonesia
To collaborate on biofuel industrialdevelopment to help meet shortage of petroleum fuel through renewable energysources such as palm oil
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Background
Not getting optimum value for palm oilknowing that palm oil has a number of positive properties
Differential duty of palm oil & soyabean oilin India tantamount to price difference
US$100 US$150 per tonne of oil betweenpalm oil & soyabean oil
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Product
CPO
CSBO- USA
CRSO- EU
FOBPrice
(US$/t)
380
515
728
Freight
(US$/t)
35
70
62
Duty
(%)
65.0
50.8
50.8
Landedprice
(US$/t)
684.8
882.2
1191.3
INDIAN MARKET1ST January 2005
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Background (cont)
Malaysia has a proposal to overcome thisshortcoming by regulating supply /
demand of palm oil through application of palm oil as biofuel
If Malaysia & Indonesia, the major producers of palm oil collaborate, it willlead to more equitable price for palm oil
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Background (cont)
Use of RBD palm oil & RBD palm olein inpetroleum diesel (B5 & B10) as biofuel
Use of B5 will result in 0.5 million tonnesof palm oil / palm olein removed from
market
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MPOB - Leverage Model
500,000 tonnes RBDPOo supplied for biofuel use at below market price of say,RM800 per tonne
Removal of 500,000 tonnes palm oil fromstocks result in average price increase of,say RM300 per tonne
Assuming 10 million tonnes export, thismeans an additional RM3 billion inrevenue/profits
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28% or RM1 billion will be paid to theMalaysian Government in the form of increased corporate taxes
Malaysian Government could allocate half of this i.e. RM0.5 billion as corporate taxcredit to companies supplying the below-cost palm oil for biofuel
Up to RM1,000 per tonne available tocompensate for price differential betweenthe RM800 and monthly average price of RBDPOo (i.e. up to RM1,800 per tonneRBDPOo price)
MPOB - Leverage Model (cont)
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RM 0.5 billion taxcredit to plantation
companies RM2billion to palm oil
industry
Additional RM3billion from exports
from higher prices of palm oil
RM 0.5 billionadditional
corporate taxesfor Government
MPOB - Leverage Model
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500,000 tpalm oil
5% of dieseluse inMalaysia
RM 3billionrevenue
50 % of stock of palm oil
RM 1 billioncorporatetax
RM 0.5
billion
Leverage Effect of MPOB - Leverage Model
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Will the MPOB - Leverage Model Work?
Qualitatively, directionally, yes. Pricesituation better with 500,000 tonnes
removed than with 500,000 tonnesremaining in stocks
Pearson Correlation Coefficient : - 0.988
How much price increase?
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If 28,000 tonnes removed monthly(336,000 tonnes per year) price increaseis RM292.15
Even a conservative RM100 increaseinstead of RM300 increase workable if government gives full tax credit
Complementary cess collection fromindustry if necessary
Will the MPOB - Leverage Model Work? (cont)
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Rationale
By removing excess palm oil stock fromthe market, the palm biofuel project willbe able to ward off any major fall of palmoil price in the future
The palm biofuel project is a viable longterm strategy for price stabilisation
The palm biofuel project will conserveforeign exchange for the country byreducing the import of petroleum diesel
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Suggested Areas of Collaboration
Palm Biofuel Project
Implementation of MPOB Leverage Model
Palm Oil Supply Management Scheme
- RBDPOo / petroleum diesel blends
(B2, B5 & B10) and RBDPO /petroleum diesel for local market
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ProposalIf the MPOB Leverage Model is
acceptable to Indonesia, we inviteIndonesia for a G G meeting at
the Ministerial level
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Global BiodieselDevelopment
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World Production of Biodiesel(000 Tonne)
0
500
1000
1500
2000
2500
3000
1991 1993 1995 1997 1999 2001 2003
WorldEurope WestAsiaNorth AmericaEurope East
Source: Austrian Biofuels Institute
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Exciting Developments In Biofuel
World biodiesel production 4x
- 1996 (591,000 tonnes) 2003(> 2 million tonnes)
EUROPEAN UNION
- 2003 (1.43 million tonnesproduction/capacity 2.246 milliontonnes)
- 2005 (3.1 million tonnes i.e. 2% of fuelconsumption)
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- 2010 (17.5 million tonnes i.e 5.75% of fuel consumption)
- 2020 - 20% of fuels will be biofuel
- Mandatory Blending of 1% from2009, 1.75% from 2010
Exciting Developments In Biofuel (cont)
UNITED STATES
Energy Policy Act 2003
- 2005 3.1 billion gallons biofuel(biodiesel & ethanol)
- 2012 5.0 billion gallons
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American Jobs Creation Act 2004 (Oct 2004)- 1 Jan 2005 Includes biodiesel tax
incentive (tax credit) for two years
Exciting Developments In Biofuel (cont)
UNITED KINGDOM
- The Energy Bill 2004 contains
provisions to bring in legislation for oilcompanies to sell given proportion of annual fossil fuel as biofuels (biodiesel,bioethanol and biogas)
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BRAZIL- Mandated blending of ethanol in gasoline(24-26%)
INDIA
- Mandated 5% ethanol blended petrol in9 states
THAILAND
- Mixture of 90% diesel and 10% crop-derivedoil : proposal submitted to Cabinet on17 January 2005
Exciting Developments In Biofuel (cont)
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Palm Biofuel ProjectsMalaysias Experience
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Fast Depletionof PetroleumFossil Fuel
Energy Crisis inmid 1970s
GrowingEnvironmental
Awareness
IncreasingEnergy
Consumption
Search for Alternative Renewable
Energy
MPOB BiofuelResearch Programme
MalaysianGovernments
four-fuel
diversificationpolicy
MPOB Biofuel ResearchProgramme
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MPOB BiofuelResearch Programme
Palm Diesel (Palm Oil Methyl Esters) asDiesel Substitute
Crude Palm Oil as Boiler Fuel
Crude Palm Oil / Medium Fuel Oil Blends asBoiler Fuel
RBD Palm Olein / Petroleum Diesel Blendsas Industrial and Transport Fuels
RBD Palm Oil / Petroleum Diesel Blends asTransport Fuel
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Role Of Palm Oil Industry
Already leader in solid biofuel : 364 palm oil
mills use palm fibre and shell successfully,self sufficient in energy
Expected to lead again in liquid biofuel
Potential great, currently < 1% biodiesel frompalm oil
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Raw Materials for Biodiesel
Palm Oil (1%)(Malaysia)
Others (1%)
Soyabean Oil (1%)(USA)
Sunflower Oil (13%)(USA & Europe)
Rapeseed Oil (84%)(Europe)
Source: Austrian Biofuels Institute
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Oil Yield
Yield(tonne / ha / yr)
Palm Oil (Malaysia) 3.75*
Rapeseed (EU) 1.33**
Soyabean (USA) 0.46**
Sunflower (Argentina) 0.66**
Source: * MPOB (2004) ** Khoo (2001)
Highest Yield
& Cheapest Oil
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Crude Palm Oilas Biofuel
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Crude Palm Oil as Biofuel
2 approaches :(A) Crude Palm Oil (CPO)(B) Crude Palm Oil (CPO) / Medium Fuel
Oil (MFO) Blends
Applications :
Boiler fuel for power generation Boiler fuel for steam generation for
industrial applications
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Satisfactory flame characteristics Flue gas emission appeared normal Reduction in CO 2, SO 2 and NOx
emission
CO 2 1.55% SO 2 28.27%
NO 22.62% H 2S 27.76%
NOX 22.62%
Research Findings :
Crude Palm Oil as Biofuel (cont)
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RBD Palm Olein / Petroleum Diesel Blendsas
(A) Industrial Fuel
(B)Transport Fuel
RBD Palm Oil / Petroleum Diesel asTransport Fuel
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- all operating parameters withinacceptable limit of engine manufacturer
- No problem in operation
RBD Palm Olein / Petroleum DieselBlends as Industrial Fuel for
Power Generation
Summary of trials using RBD Palm Olein /
petroleum diesel
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RBD Palm Olein / Petroleum DieselBlends as Industrial Fuel for
Power Generation (cont)
- Significant improvement in fuel toelectricity onversion efficiency at lower blending ratio (10 12%) of RBD palmolein
- Optimum diesel engine performance atblending ratio 65 67% of RBD palmolein
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Palm Oil and Palm Oil Productsas Transport Fuels
(commenced in 2002)
Processed Liquid PalmOil / Petroleum DieselBlends (B2, B5, B10)
RBD Palm Oil / PetroleumDiesel Blend (B5)
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16 MPOB vehicles have been using RBDPOo / PDblends (B2, B5 and B10) as fuel since 2002
B2 4 vehicles; B5 8 vehicles; B10 4 vehicles
Total mileage covered to-date : 850,000 km
No technical problems encountered so far
Performance similar to that when petroleumdiesel is used
RBD Palm Olein (RBDPOo) /Petroleum Diesel (PD) Blends
as Transport Fuel
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Property B2 B5 B10 RBDPOo PD
Density at 15 CASTM D4052
0.8545 0.8565 0.8597 0.9199 0.8530
Sulfur Content( mg/kg)ASTM D4294
0.14 0.14 0.14
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Trial on B5 blend involving 5 MPOBvehicles since March 2004
Total mileage covered to-date : 38,000 kmNo technical problems encountered so far
RBD Palm Oil / Petroleum DieselBlends as Transport Fuel
MPOB Pajero Participatingin Field Trial
K F l Ch t i ti f
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Property B2 B5 RBDPO PD
Density at 15
CASTM D4052
0.8545 0.8563 0.9149 0.8530
Sulfur Content( mg/kg)ASTM D4294
0.14 0.14
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Skid Tanks Storing B2, B5 and B10 of RBD Palm Olein / Petroleum Diesel Blends
MPOB Pajero Participating
in Field Trial
Dispensing Pump
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Palm Diesel(Palm Oil Methyl Esters)
as Biodiesel(proposed for overseas market)
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MPOB Palm Diesel Project
Commenced in 1981
Palm diesel : systematically and
scientifically evaluated as a dieselsubstitute
Includes laboratory determination of fuelcharacteristics, stationary engine testing,preliminary field trial and exhaustive fieldtrial
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3000 TPY Palm Diesel Pilot Plant at MPOB
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Successfully conducted between 1986 1994 ondiesel engines of different makes and models
Trials involved 30 buses mounted with MercedesBenz OM352 Engine :
100% palm diesel (10 buses)50% : 50% blend (10 buses)100% Petroleum Diesel as control (10 buses)
Results in terms of engine performance, fuelconsumption, exhaust emission, repair andmaintenance were promising
Exhaustive Field Trials using Palm Diesel
Fi ld T i l i g V i Di l E gi
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Field Trials using Various Diesel Engines
ld l d ( ) l
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Field Trials using Mercedes Benz (OM352) DieselEngines Mounted on Passenger Buses
(each bus covered 300,000 km)
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Summary of Field Trial
No modification of conventional dieselengine required
Good engine performance
Much cleaner exhaust gas emission(reduction of hydrocarbon, CO, CO 2, SO 2 content)
Engine oil: still usable after recommendedmileage
Cetane number / Diesel Improver ( 62.4 c . f . 37.7 for petroleum diesel from Europe)
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Summary of Field Trial
Enhanced safety characteristic in storageand transportation (174 oC = Flash point c . f . 98 oC for petroleum diesel)
Normal carbon build up in engine fuel nozzleexcept nature of carbon different
Comparable fuel consumption withpetroleum diesel (e.g. 3 - 4 km per litre for bus tested)
Key Fuel Characteristics of Palm Diesel
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Product
Tests ConductedPalm Diesel Malaysian Diesel
Specific GravityASTM D1290
0.8700@ 74.5
0.8330@ 60.0
Colour (visual) Reddish Yellow
Sulfur Content (% wt)
IP 242
< 0.04 0.10
Viscosity @ 40 C (cSt)ASTM D445
4.5 4.0
Pour Point ( C)ASTM D97
15.0 15.0
Final Recovery (ml) 98.0 -
Gross Heat of Combustion (kJ/kg)ASTM D2382
40,135 45,800
Flash Point ( C)ASTM D 93
174 98
Conradson Carbon Residue (% wt)
ASTM D1980.02 0.14
y(Crude Palm Oil Methyl Esters)
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Production of Phytonutrients
from Palm Diesel usingMPOB Technologies
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CPO Methyl Esters
(Palm Diesel)
Distillation
Phytonutrients ConcentrateContaining Carotenes, Vitamin
E, Phospholipids (Lecithin),Sterols, Coenzyme Q and
Squalene
Crude Palm Oil ( CPO )
Distilled MethylEsters
(Palm Diesel)
Feedstock for value-added
oleochemicalproducts
CarotenesVitamin E
SterolsSqualene
Coenzyme QPhospholipids
(Lecithin)
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Production Of Individual Carotene,Vitamin E & Cholesterol-free Sterol
- individual carotene, e.g. a - and b -carotenes, lycopene andphytoene
- individual vitamin E isomers, e.g.a - and g-tocopherols, a -, g- and d-tocotrienols
- b -sitosterol
+ +
High purity (>95%) of the followingproduced :
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Season Pour Point(C)
Spring -10
Summer 0
Autumn -10
Winter -20
Seasonal Pour Point Requirementof Biodiesel
Autumn
Winter
Summer
Spring
Fuel Properties of Normal Palm Diesel &
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Properties UnitEN 14214 ASTM D6751 Normal & Low Pour
Point Palm Diesel
Min Max Min Max
Ester Content % mass 96.5 - - - 98.0 99.5
Density at 15 C g/cm 3 0.860 0.900 - - 0.87 0.89
Viscosity at 40 C cSt 3.5 5.0 1.9 6.0 4.0 5.0
Flash Point C 120 - 130 - 170 - 200
Sulphur Content mg/kg - 10 - 0.05 1 < 0.01 1
Carbon Residue(on 10% distillationresidue)
% mass - 0.3 - 0.05 2 0.02 0.03 2
Cetane Number - 51.0 - 47.0 - 53.0 59.0Oxidative Stability,110 C hours 6.0 - - - > 6
Copper StripCorrosion(3h at 50 C)
rating 1 - - 3 1a
1Unit in % mass 2Test on 100% distillation residue
Fuel Properties of Normal Palm Diesel &Low Pour Point Palm Diesel vis--vis EN14214 & ASTM D6751
F l P i f N l P l Di l &
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Properties Unit EN 14214 ASTM D6751 Normal & Low Pour Point Palm Diesel Min Max Min Max
Sulphated AshContent % mass - 0.02 - 0.02 < 0.01
Basic Sediment andWater mg/kg - 500 - 0.050 < 500
Acid Value mgKOH/g - 0.5 - 0.8 < 0.3
Iodine Value - - 120 - - 51 83
Content of LinolenicAcid Methyl Esters % (m/m) - 12 - -
0.5
Content of FattyAcids with more than3 double bonds
% (m/m) - 1 - - < 0.1
Fuel Properties of Normal Palm Diesel &Low Pour Point Palm Diesel vis--vis EN14214 & ASTM D6751
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Properties UnitEN 14214 ASTM D6751 Normal & Low Pour
Point Palm DieselMin Max Min Max
Methanol Content % (m/m) - 0.2 - -
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Palm oil, the cheapest vegetable oil,offers the potential as environment-friendly and renewable fuel
Palm oil methyl esters (palm diesel)are ready diesel substitute
Palm Oil as Fuel : A Summary
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CPO and RBD palm olein blended withmedium fuel oil and petroleum diesel,respectively, have also been used as
fuel for power station and steamgeneration plant
RBD palm olein and RBD palm oilblended with petroleum diesel arefound to be suitable as vehicle fuel
Palm Oil as Fuel : A Summary (cont)
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Impact of the Palm Biofuels Project toMalaysian Palm Oil Industry / Nation
Safety Net
Alternative Renewable Energy inline with Malaysian Governmentscall to source for renewable 5 th fuel
Diesel Substitute / Diesel Improver
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Impact of the Palm Biofuels Project toMalaysian Palm Oil Industry / Nation
(cont)
Environment-friendly fuel : positiveimpact to the environment
Carbon Credit under Clean
Development Mechanism (CDM)
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Impact of the Palm Biofuels Project toMalaysian Palm Oil Industry / Nation (cont)
Other Benefits of Palm Diesel Project :
Provides a source for recovery of phytonutrients e.g. Carotenes, Vitamin E,Sterols, Squalene, Coenzyme Q andPhospholipids
Alternative process for the production of methyl esters as oleochemicalsfeedstocks
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Technologies Available from MPOB :
RBD Palm Olein/Petroleum diesel blends
Palm diesel (palm oil methyl esters)including low pour point palm diesel
Palm phytonutrients (e.g. carotenes andvitamin E) from palm diesel
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ConclusionsIf the MPOB Leverage Model is acceptableto Indonesia, propose a G to G meeting atMinisterial Level
Malaysia will be pleased to shareexperiences in Biofuel R & D with Indonesiaincluding technology know-how
Malaysia also welcomes any other proposalfrom Indonesia to achieve optimum value for palm oil
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Malaysia cordially
invites your Minister tomeet our Minister todiscuss on Biofuel andSupply Rationalisation
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Thank You