Elnusa to acquire biodiesel producer

IDX-listed oil service provider PT Elnusa Tbk has allocated US$10-15 million to acquire a biodiesel producer this year as the company plans to enter the prospective biodiesel market, Kontan daily reported on Tuesday.

The paper quoted company Head of Joint Venture and Strategic Planning Division, Sri Nurbito as saying that the government?s latest regulation increasing the mandatory mix of biodiesel in fuel used for transportation and industrial sector to 10 percent from 5 percent has made the domestic biodiesel market to become more attractive.

Sri declined to disclose the identity acquisition target. ?The acquisition value is about $10-15 million,? he said.

To ensure raw material supply, Elnusa has also signed a joint venture agreement with a South Sumatra palm oil producer.

Sri said that the company decided to acquire a producing company as developing from scratch takes time. This portal reported late last year that Elnusa planned to construct a biodiesel plant in North Sumatra in 2014.

Elsewhere, the paper said that Elnusa has set a target to obtain oil service contracts worth $300 million this year, in addition to carry over contracts worth $200 million.

Aside from creating a new business, Elnusa also has decided to cut down non-performing businesses, including ending its marine seismic joint venture with France-based CGG Veritas end of this year.

The company said that the operation of seismic vessel requires complex preparations and huge funding, while at the same time the market is shrinking. (*)