JAKARTA (Dow Jones)--Indonesia and Brazil this week will sign a deal to establish a joint committee to foster cooperation between the two countries in agribusiness and biofuel development, the Brazilian embassy in Jakarta said in a statement Wednesday.
Dr. Luis Carlos Guedes Pinto, Brazil's Minister of Agriculture, Livestock and Food Supply, will visit Jakarta March 15-16 to sign a memorandum of understanding with Anton Apriyantono, Indonesia's Agriculture Minister, to establish a so-called Consultative Committee on Agriculture between the two countries.
The statement didn't give further details on when the committee might be set up, but said it would "focus on the discussion of themes such as opportunities in agribusiness and cooperation in the ethanol fields" between the two countries.
Indonesia is in the process of launching a nationwide revitalization of its agricultural sector, and sees biofuel development as a key growth area. The Indonesian government has earmarked IDR13 trillion ($1.42 billion) from its state budget to provide subsidies to biofuel producers this year.
In January Indonesia's government signed deals worth around $12.4 billion in total with local and foreign investors to develop biofuel capacity. According to Alhilal Hamdi, chairman of the government-backed National Biofuel Development Committee, with the new investments, Indonesia's biofuel output could reach 200,000 barrels of oil equivalent a day by 2010.
The country is estimated to have produced 720,000 kiloliters of biofuel last year. Most of Indonesia's current biofuel capacity is for biodiesel, a diesel substitute derived from seed oils such as crude palm oil combined with fossil diesel.
The government is anxious to begin developing bioethanol, an alcohol-based substitute for gasoline, and plans to plant 2.25 million hectares with sugar cane and cassava over the next few years to supply ethanol feedstock.
The starch content of both plants can be fermented and converted to ethanol. Brazil is already the world's leading producer of bioethanol, which it uses as a substitute for gasoline in around 40% of its vehicles, and exports to other countries. Brazil produces ethanol mostly from sugar cane.
Dr. Pinto Tuesday agreed in principle to export ethanol to Japan to help the Japanese government achieve its goal of replacing 500,000 kiloliters of fossil fuels with biofuel, Kyodo News reported.
Brazil may start supplying Japan with bioethanol in 2008, the report said, citing Japanese officials who had spoken to Environment Minister Masatoshi Wakabayashi.
Indonesia's state-owned energy concern, PT Pertamina (PTM.YY) is already selling biodiesel in more than 100 service stations in Jakarta and Surabaya, the East Javanese capital, and says it wants to develop ethanol for use in gasoline-burning cars.
-By Reuben Carder, Dow Jones Newswires; 62 21 3983 1277; Reuben.Carder@dowjones.com -Edited by Jarrett Banks