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November 24, 2008

Norwegian biofuels firm to start commercial jatropha production in Ghana in 2009

by Wendell Roelf

Norwegian biofuels firm ScanFuel expects to start commercial operations in Ghana early in 2009, producing 5,000 barrels per day of crude oil equivalent by 2015, its chief executive said on 21.

ScanFuel's operation, based outside Ghana's second largest city of Kumasi, will initially see 10,000 hectares planted with the high oil-yielding jatropha plant, with another 10,000 hectares reserved for food production.

Jatropha seeds, which are crushed to produce vegetable oil for refining into biodiesel, are seen as one of the most promising areas of biofuels production, especially in Africa.

"By 2015 we intend to produce, when it comes to oil, 5,000 barrels per day, roughly 300,000 metric tonnes of crude oil (equivalent) per year," said CEO Thor Hesselberg at a Biofuels Markets Africa conference in Cape Town.

ScanFuel AS Norway was co-founded by Hesselberg and three others in 2007 and had its Ghanaian subsidiary, ScanFuel Ghana Ltd, registered the same year. Hesselberg said principal funding was provided by Norwegian entrepeneur Stale Kyllingstad and IKM Invest, which forms part of the large IKM Group in Norway that services the oil and gas industry.

The Ghanaian unit has contracted about 400,000 hectares, with up to 60 percent reserved for biofuel production, "not less" than 30 percent for food production and the remainder for biodiversity buffer zones.

Hesselberg said ScanFuel, which invested $4 million in seed funding for the project, received final approval last week from Ghana's government to proceed. He added that the firm would be able to raise the additional $20-$30 million needed to commercialise the project despite a global credit squeeze which has led other European biofuel firms to pull back from Africa because of a lack of finance.

"Investors are more concerned about where they put their money and I think the benefit for us, being one of the more serious players, is that a lot of the not-so-serious players are pulling out because they won't get funding," he said.

Africa has embraced a burgeoning biofuels industry in a bid to lessen dependence on oil imports. Critics, however argue the move could decrease arable land for much-needed food production.
The U.N. Food and Agriculture Organisation has also urged Western countries to rethink their rush to biofuels, arguing that they were pushing up food prices.


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