One of a handful of giant Western Oil Majors - BP - (and still a mere fraction of the size and reserves of Saudi Aramco) is taking a punt on biofuels, in a new joint venture with D1 Oils.

According to their website, D1 Oils, sees itself emerging as a biodiesel leader in;

* Agronomy - the science, planting and production of inedible vegetable oils.

* Refining - the designing, building, owning, operating and marketing of biodiesel refineries.

* Trading - the sourcing, transport and trading of seeds and seedlings, seedcake, crude vegetable oils and biodiesel.

I've thought for some time that as biofuels became a bigger and more profitable player, "Big Oil" would start to take an interest to hedge their bets against the risk of volatile oil prices and of course, their declining reserves. It seems that now this is starting to happen. BP like many traditional oil firms, was embarking on a path to get rid of the excess petrodollar cash in dividends. I sense though that in this period of sustained higher oil prices, this will not continue ad infinitum - the urge to hold onto the cash and diversify out of the core business is just too great.

As I wrote here, this problem for shareholders, known as "free cash flow dispersion" can and does create other headaches. All the same, BP could claim to be a pioneering oil firm in investing in alternative energy. They after all got heavily into the solar business some years ago and more recently in 2006 with Clipper Windpower.

Would that Saudi Aramco ever do the same !