Jakarta – The government of Indonesia, the world's largest palm oil producer, is now looking at its vast easternmost provinces in Papua to expand its palm oil plantations, a senior official said Wednesday.

"After Sumatra and Kalimantan became too dense for new palm oil plantations, the only land available is in Papua," the agriculture ministry's Director General for Plantations, Achmad Manggabarani, said on the margin of a three-day international conference on the commodity here.

He said the two provinces in Papua, the western half of New Guinea island, have three to four million hectares (up to 9.8 million acres) of land suitable for palm oil plantation.

"Several companies have already expressed interest, especially from Malaysia," Manggabarani said without giving details. He said smaller concessions would be offered in Papua than the normal 100,000 to 200,000 hectares in Sumatra and Kalimantan.

Under the country's decentralisation drive, the issuing of palm oil concessions is the responsibility of local governments. "They should only give out 20,000 hectares" per concession, Manggabarani said.

Several environmental groups, including Greenpeace, have called for a moratorium on the expansion of oil palm plantations in Indonesia, warning that soaring world demand is creating an environmental crisis. The destruction of Indonesia's forests is seen as a major contributor to global warming and climate change.

Indonesia produced an estimated 16.4 million tonnes of palm oil in 2007. Indonesia and Malaysia, the second largest producer, produce 85 percent of the world's palm oil which is enjoying a boom on the back of strong global demand and tight supply.