Malaysia expects to double biodiesel production in 2007 to meet growing demand for alternative fuels, commodities Minister Peter Chin said today.

Industry officials also said they were "bullish" about the long-term prospects for crude palm oil, which is used in biofuel production, despite fears that prices could drop in line with easing oil prices.

Chin said Malaysia was on track to produce 1.155 million tonnes of palm oil-derived biodiesel in 2007 - more than double the production of some 400,000 tonnes this year.

"Given the substantial quantity of palm oil available in the country and the developed biodiesel technology ... Malaysia is poised to be the number-one palm-based biodiesel producer in the world," he told a biofuels conference.

Industry officials said more than 90 percent of the biodiesel produced would be for export.

Last August Malaysia launched a biofuel policy which aims to reduce the country's fuel import bill and promote the use and export of alternative fuel sources.

Chin said 75 projects had been approved up to November 2006 for companies to build plants to produce palm oil-derived biodiesel.

Growing demand

Total investment in the projects amounts to RM7.01 billion, with RM4.87 billion from domestic investors and RM2.14 billion from foreign investors mostly from Australia, Singapore, the US, India, Italy and Japan.

Chin said demand for biofuels would "increase tremendously" from countries including European nations racing to cut greenhouse gas emissions under the Kyoto Protocol.

Although there are fears demand for crude palm oil as an alternative fuel will drop in tandem with easing oil prices, officials said they were optimistic.

"The increase (in demand) has been very strong. Malaysia is doing very well in terms of market share, supplying the European and the American market," said Yusof Basiron, chief executive officer of the government's Malaysian Palm Oil Council.

Besides biofuel, demand is also growing in the US for palm oil as an edible oil amidst heightened awareness against transfats, which are linked to coronary heart disease and not found in palm oil, he told a press conference.

"All these are very bullish for palm oil demand, in the US especially," said Yusof.

Malaysia is the world's top producer of crude palm oil. The nation's palm oil products contributed some RM27 billion in exports in 2005.