Malaysian conglomerate Genting Bhd is planning to invest up to US$3 billion in biofuel plants in Indonesia.

The New Straits Times said the investment would be made through Singapore-based Genting Biofuels Asia Pte Ltd, and would focus on the Papua region.

"One of the units has signed a cooperation agreement with Papua's Merauke district administration to invest US$3 billion in biofuel production," an unnamed senior Genting official told the newspaper.

"The investment is expected to be fruitful," he said.

The news saw Genting's shares jump RM1.25 to RM35 by mid-session on the the Kuala Lumpur Stock Exchange Monday.

The move is the third major foreign investment in two months by Genting, which is also spending US$3.2 billion on a resort and casino project on Singapore's Sentosa island.

Malaysia and Indonesia are currently duelling for supremacy in the palm oil sector. The two countries account for 85 percent of world production and Indonesia is expected to claim Malaysia's title as top producer next year.

Both nations are also expanding their biofuel industries, as high prices for crude oil cause demand for the alternative fuel to soar.