November 30, 2007 / 2:02 PM / 12 years ago

Kazakhstan to adopt biofuel law

ASTANA (Reuters) - Kazakhstan will next year adopt laws to regulate its fledgling biofuel industry and plans to construct at least two more plants in the next 18 months to produce environmentally friendly fuel from crops, industry officials said.

The Central Asian country has the potential to produce 300,000 tons a year of biodiesel and export half, vice-minister for agriculture, Akylbek Kurishbayev, told Reuters.

Kazakhstan could also produce up to 1 billion liters of bioethanol, he said.

“The potential is huge. If we use this potential wisely, we can become one of the world’s top five producers of biofuels,” Beisen Donenov, executive director of the Kazakhstan Biofuels Association, said on the sidelines of a grains forum.

Kazakhstan harvested a post-Soviet record of 20.1 million metric tons of wheat this year, giving it ample stocks to use in production of bioethanol. The country has recently started to grow rapeseed in its northern provinces, from which biodiesel can be produced.

Finding markets, however, will be crucial. The country’s first and only biofuel producer, privately owned Biohim Co, has been unable to sell most of its production due partly to import restrictions in target markets. The $100 million plant, opened last year, is not currently operating.

“We are making upgrades, improving the technology,” Biohim General Director Yevgeny Sutyaginsky said. “In mid-December, we’ll start the plant again.”

Biohim can produce 57,000 tons a year of bioethanol at its plant in the town of Taiynsha, 400 km north of the Kazakh capital Astana. Sutyaginsky said it had sold 4,000 tons to trading company Vitol this year, but had been unable to sell much more to date.

It will start producing petrol containing ethanol from next month and sell it in the domestic market and to China, he said.

OILSEED SOWING

The Agriculture Ministry says new legislation to be adopted in the first half of 2008 will help boost investment in biofuels and manage the use of crops to avoid any shortages in the food sector.

Donenov of the biofuels association said a second plant, also privately owned, would soon begin producing bioethanol in the southern Kazakh town of Taraz.

He said the government had completed a feasibility study on a third plant, the first state-run venture, which would start producing bioethanol and biodiesel in northern Kazakhstan about 18 months from now.

“The European Union will be the main target market,” Donenov said.

While Kazakhstan has plenty of wheat, it has only started growing oilseeds in the last few years.

Of 11 million hectares sown in three key grain-growing provinces in the north of the country, only 171,000 hectares were sown to canola in 2007, said Joerg Zimmermann, manager of the Eurasian operations of Canadian firm FarmPure Global.

“I’ll be very happy if we reach 1 million hectares. There’s probably six or seven years to go,” said Zimmermann, whose company supplies seeds and runs a joint venture demonstration farm in northern Kazakhstan.

Addressing the forum, he said oilseeds offered a profitable alternative to farmers in Kazakhstan. His company’s demonstration farm, NovoAgro, has had canola yields of between 1.1 metric tons and 2.4 metric tons per hectare.

“If you assume a canola yield of 1.3 (metric) tons per hectare, and 1.8 (metric) tons per hectare for wheat, we still have an additional value on canola production of $80 per hectare,” he said.

“The main problem in Kazakhstan is that producers are not yet used to growing canola. We don’t have enough equipped elevators to take canola for export and internal demand has so far not been established.”

Editing by Peter Blackburn

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