Sweden's Preem to make biodiesel from pine tree oil

STOCKHOLM (Reuters) - Swedish refiner Preem said on Monday it planned to start making biodiesel from pine tree oil, a non-edible forestry industry waste product, in the face of criticism about the effect of biofuel on food prices.

The privately owned company said it would join with forest owners Sodra Skogsagarna and Sveaskog to finance a plant to produce pine tree oil as a biodiesel feedstock.

Preem will also revamp its crude oil refinery in Gothenburg in Sweden's southwest to be able to refine the pine tree oil, as well as vegetable oils and animal fats, into biodiesel.

Preem spokesman Thomas Ogren said the Gothenburg refinery would start off by refining pine tree oil.

"The adjustment of the refinery will be done by the end of 2009 and (it) will then be able to refine 140,000 tonnes of green raw material per year," Preem said in a statement.

"In order not to compete with food production, Preem will in the first place use forestry-based commodities."

Preem said it would invest 250 million Swedish crowns ($42 million) in both initiatives towards the new breed of biofuels.

Ogren said 50 million crowns would go into the new plant and around 200 million in the adjustment of the refinery.

"So far we have mainly worked with rapeseed and ethanol (to produce biofuel). This will be a new step," he said, adding the firm would not rule out one day refining materials such as rapeseed and waste products from slaughterhouses.

Biofuels are mainly produced from food crops such as wheat, maize, sugar cane and vegetable oils and are seen as a way to cut greenhouse gas emissions that contribute to climate change.

But critics say diverting land from food crops to biofuel feedstock production has helped push up global food prices.

(Reporting by Anna Ringstrom; editing by James Jukwey)