India Israel Algae Biodiesel

* Targets over $200 mln in sales in 2013

* First projects to grow algae in India starting in 2012

* Aims to reach cost of $50 a barrel

By Tova Cohen

TEL AVIV, April 4 (Reuters) - Algae-based biodiesel producer World Health Energy Holdings (WHEN) plans to begin two commercial projects in India this year and is targeting over $200 million in sales in 2013.

The first project, with Prime Inc of India, will grow algae on 250 acres at a cost of $100 million and produce $150 million in biodiesel as well as protein for animal and fish feed or that can be turned into ethanol, WHEN Chairman Chaim Lieberman said.

Prime, which provides infrastructures and transportation services to oil companies, will put up the funding in exchange for a 70 percent stake in the project.

The second project, with SHK Energy Projects of India, will comprise a $25 million, 45-acre algae farm expected to bring in $35 million in revenue.

"We are working on setting up operations for both projects this year and be operational by June 2013," Lieberman told Reuters. "We are also in talks with utilities in South Africa and Italy and the U.S. Navy for similar projects."

WHEN, which merged with an over-the-counter listed shell company, competes with larger firms such as KiOR and Solazyme. But Lieberman said most of the competitors focus on distilling cellulose from algae into ethanol.

"We grow fattier species of algae and squeeze out oil," he said, noting biodiesel was a much larger market than ethanol.

The U.S.-Israeli WHEN has completed a pilot project in the Beit Shean region of eastern Israel and has sold small amounts of algae to the pharmaceutical industry in Israel.

The London-born Lieberman, who studied western, eastern and aboriginal medicine, said the problem with algae-based biodiesel has been cost, noting that when he started out 11 years ago it cost more than $2,000 a barrel to produce.

"We have found a way to grow algae and cut 95 percent of the cost," Lieberman said. "When we scale up the project we will reach $50 a barrel."

WHEN's innovations include a wave machine to keep the algae moving and recyclable plastic sleeves to maintain a closed environment that can easily be replaced if contaminated.

Lieberman said algae has several advantages over other green energy sources such as corn, soy or palm oil.

"You're not stealing a food source like with palm oil and if you're looking for jet fuel it costs less to refine algae because it has a higher octane," he said.

The same amount of land will produce 180 times the quantity of oil from algae than corn or soy. WHEN also uses non arable land and recycled or even sea water to grow algae.

The company is backed by Oris Investments, a clean tech fund. Managed by Yuval Rabin, son of assassinated Israeli prime minister Yitzhak Rabin, the fund has invested $1.5 million in WHEN, which also has several private investors.

The company does not plan at this point to raise more money but is seeking joint ventures similar to the ones it has in India. WHEN also aims to be commercially viable rather than depend on government subsidies.

"The point is to be self sufficient as a commodity business," Lieberman said. (Editing by Anthony Barker)