JATOIL - Green Energy

BIODIESEL AUSTINDO (INDONESIA)

Jatoil acquired a 50% ownership of PT Biodiesel Austindo (Biodiesel Austindo), a company incorporated in Indonesia. In return, Jatoil issued 20,000,000 Jatoil Shares to the shareholders of Biodiesel Austindo and will make available to the company a loan of $2,000,000, at an interest rate of 10% per annum, and secured against the assets of Biodiesel Austindo.

As at 31 October 2007, Biodiesel Austindo had entered into memoranda of understanding with farming cooperatives for jatropha cultivation covering over 240,000 ha of land in the Indonesian provinces of Lampung and Nusa Tenggara Timur (NTT). The objective is to secure contracts for more than 350,000 ha of additional land, giving Biodiesel Austindo access to a total of more than 600,000 ha of land for jatropha cultivation.

Under these arrangements, local farmers provide their land, on which they plant, weed and water their jatropha crops, and then pick and defruit the jatropha seed. In return, Biodiesel Austindo provides the farmers with seed and other farming inputs, training and technical support.

To support the start-up, Biodiesel Austindo will provide farmers with a special payment for the first year crop value and guarantee to purchase subsequent seed production at market prices.

Production of jatropha oil is labour-intensive. For each 10,000 hectares of land used to cultivate jatropha, up to 10,000 jobs could potentially be created in regions of Indonesia where there is currently high unemployment and poverty.