Palm oil price hikes expected to force delays in four Malaysian biodiesel projects

In Malaysia, skyrocketing palm oil prices are expected to delay the opening of four new Malaysian biodiesel facilities scheduled to open in 2007.

Government officials say that unless world oil prices increase higher than the current $82 a barrel, or the four plants consolidate to achieve economies of scale, they do not see plants opening this year unless palm oil prices receded.

Palm oil futures are up 28 percent this year and 80 percent over 2005.

Last week, Singapore had announced plans to triple biodiesel production at Jurong Island by 2015, citing the proximity to Malaysian palm oil producers. At the same time, Indonesia, Thailand and the Philippines have announced that they plan to increase palm oil production cultivation to 5 million acres.

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