Oiltek announced a heads of agreement with Bioseaga Industries for the construction of a 300 MT/day sustainable aviation fuel (SAF) facility in Sabah worth US$350mil (RM1.4bn).
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The RM1.4bn contract will boost the orderbook by five times to RM1.75bn. We expect the project to require 2.5 years to complete. This project will be the 3rd SAF plant in Malaysia after EcoCeres and Pengerang, both in Johor.
With jet fuel prices doubling since the Iran war, we expect the SAF plant's demand and profitability to improve dramatically. Demand for SAF is driven by the increasing commitment to renewables, the use of sustainable waste oil, and energy security to ensure the availability of jet fuel.
Key Highlights
Size:
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Feedstock:
Palm Oil Mill Effluent (POME) and Used Cooking Oil (UCO)
Offtaker:
Exported to Brunei for drop-in fuel use. Due to geographic location, we expect the jet fuel blended with SAF to be exported to Japan and South Korea.
Timeline:
The heads of agreement will be 1 year from 6 April 2026. The target is to enter a definitive agreement within six months. We assume some work will be commence and billed from 4Q26. We model a 2.5 years time period to complete the project. We are assuming 5% recognition in FY26e, followed by 45% in FY27e, 45% in FY28e and 5% FY29e.
Conditions:
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