FGV sets sight on LNG after biogas deal

The planter has sounded the move to downstream activities as poor CPO prices continue to batter its earnings


FGV Holdings Bhd is looking to expand into liquefied natural gas (LNG) following its venture into bio-compressed natural gas (bio-CNG) as the company seeks to monetise tonnes of waste material generated from its palm oil operation.

The planter has sounded the move to downstream activities as poor crude palm oil (CPO) prices continue to batter its earnings.

It recorded a net loss of RM3.37 million in the first quarter ended March 31, 2019 (1Q19). For the whole of 2018, the company posted a net loss of RM1.08 billion, largely due to impairments and lower average CPO price.

FGV COO of plantation Syed Mahdhar Syed Hussain said the planter is considering “exploratory work” on LNG following its recent deal to convert its massive empty fruit bunch (EFB) stockpile into biogas.

“At the moment, our focus is on bio-CNG, but moving forward, we are also looking at LNG generated from biogas. Although

LNG is much more expensive to produce, we are looking at how there can be more value for money, so to speak.

“This is not something you do not foresee now, but we must also collaborate on research and development on how we can move forward from here,” he said after a memorandum of understanding (MoU) signing ceremony between FGV Palm Industries Sdn Bhd, Sime Darby Energy Solutions Sdn Bhd and Biotek Dinamik Sdn Bhd (BDSB) in Kuala Lumpur yesterday.

Under the two-year deal, FGV is expected to utilise 35 of its mills to produce biogas using 3.47 million tonnes of EFB on a commercial scale. FGV currently generates 170 million cu m of biogas a year from 30 mill which is equivalent to 1.5 million litres of diesel per mill annually.

Its first full-scale bio-CNG plant, with a production capacity of 80,000MMBtu (one million British thermal units) per annum, was commissioned in 2014.

FGV group CEO Datuk Haris Fadzilah Hassan said the project is expected to generate substantial values to the group, while at the same time, help the government meet its renewable energy (RE) 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,” he said.

BDSB MD and CEO Eddy Yap Wai Hong, whose company specialises in biofuel production, expects the commercialisation of bio-CNG in Malaysia to begin next year.

Yap said bio-CNG has the potential to become the country’s next biofuel source following the success of palm oil-based biodiesel. He said both biodiesel and bio-CNG have similarities as they are produced using feedstock from the palm oil industry and are classified as green renewable fuel.

“Globally, bio-CNG is widely used in the industrial and transportation sectors as a cleaner replacement to fossil fuels. For a start, we intend to introduce bioCNG domestically, while in the mid to longer term, we are targeting to export some of our production in the form of bio-LNG to markets a Europe, China, Japan and Korea,” Yap said.