FGV Palm Industries, Sime Darby Energy Solutions and Biotek Dinamik enter tripartite MoU on BioCNG
31 July 2019
Published Date: 31 July 2019
KUALA LUMPUR, 31 July 2019 - FGV Palm Industries Sdn Bhd (FGVPI) (formerly known as Felda Palm Industries Sdn Bhd), Sime Darby Energy Solutions Sdn Bhd (SDES) and Biotek Dinamik Sdn Bhd (BDSB) are teaming up to produce bio-compressed natural gas (BioCNG) from waste biogas generated from palm oil mill effluent (POME) ponds.
BioCNG is a potential substitute for diesel in vehicles and also in the manufacturing industry. FGV currently generates approximately 170 million cubic meters of biogas a year from 30 mill sites, as a bi-product of the anaerobic digestion of POME. This is equivalent to 1-1.5 million litres of diesel per palm oil mill annually.
“The three parties will leverage each other’s expertise and strengths to ensure that the venture will take off successfully. FGVPI shall provide the mill sites, biogas and/or POME supplies, and coordinate the project to ensure its smooth rollout in a timely manner,” FGV’s Group Chief Executive Officer Dato’ Haris Fadzilah Hassan said. Once this project is fully rolled out, FGV will have the most BioCNG sites in the world, for a plantation company.
FGVPI, an indirect subsidiary of FGV Holdings Berhad, and SDES, a wholly-owned subsidiary of Sime Darby Berhad, signed a tripartite Memorandum of Understanding (MoU) with BDSB to develop BioCNG on a commercial scale. The collaboration involves the potential development of 35 brownfield and greenfield sites owned by FGVPI, over several years.
SDES is primarily involved in the provision of energy solutions for Malaysia-based industries. It has significant experience in all aspects of design, construction and maintenance of co-generation (COGEN), combined heat and power (CHP) and BioCNG projects. SDES will provide design and construction services for the proposed project as well as ongoing maintenance support.
Under the terms of the MoU, BDSB, a renewable energy company, will be the project developer, owner and operator of the BioCNG and/or the biogas plants. The project will be undertaken on a build, operate and own (BOO) basis.
“Capturing and recycling this biogas to produce a green and renewable fuel makes commercial sense, while also contributing to our efforts to reduce emissions from the production of palm oil,” Haris Fadzilah added.
This BioCNG venture is in line with the FGV group’s waste-to-wealth strategy to generate value from downstream by-products. The group is exploring the possibility of replacing some of its existing fossil fuel requirements with BioCNG. This will result in cost savings and allow the Group to reduce its carbon footprint and become a sustainable palm oil producer.
This project is expected to generate substantial value for the group and at the same time help the government meet its renewable energy target of 20% by 2025.
“This is a clear example of a ‘low hanging fruit’ which requires minimal investment from FGV, that could become a sustainable income stream, from renewable sources,” Haris Fadzilah noted. “Additionally, our mill process will be greener as waste will be managed in a more responsible manner.”
Sime Darby Industrial Sdn Bhd’s Managing Director Teoh Cy Kuan said SDES has the expertise and experience in operating and maintaining BioCNG plants, having successfully worked with FGV as project developer in a previous venture.
“SDES has been working with FGVPI since 2014 when we developed the world’s first commercial palm oil-based BioCNG plant located at Sg Tengi, Kuala Kubu Bharu, Selangor. The Sg Tengi BioCNG plant has been successfully commissioned and tested and has been supplying BioCNG to industrial customers since 2017.
“This tripartite venture between SDES, FGVPI and BDSB is a breakthrough for us to expand our business further,” Teoh added.
Meanwhile, BDSB’s Managing Director & CEO, Eddy Yap Wai Hong said his company intends to pioneer the commercialisation of BioCNG in Malaysia and hopes to market the green renewable fuel to the domestic market next year.
Yap said BioCNG has the potential to become the country’s next biofuel source following the success of palm oil-based biodiesel. He explained that both biodiesel and BioCNG have similarities as they are produced using feedstock from the palm oil industry and are classified as a green renewable fuel.
He added that BioCNG produced from biogas extracted from the POME ponds is a cleaner and more economical alternative fuel compared to fossil fuels such as LPG and diesel.
“BioCNG is a green renewable fuel which is carbon-neutral and sulphur-free. Globally, BioCNG is widely used in the industrial and transportation sectors as a cleaner replacement to fossil fuels. For a start, we intend to introduce BioCNG to the domestic industrial and transportation sectors, while in the mid to longer term, we are potentially targeting to export some of our production in the form of Bio-LNG (Bio-Liquefied Natural Gas) to markets in Europe, China, Japan and Korea. We hope our initiative will not only help to create a more robust downstream industry for the palm oil sector but will also provide a sustainable waste management alternative and income model for palm oil mills,” Yap added.
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