6.28.2006 - 01:40pm ET

(CSRwire) SAN DIEGO--(BUSINESS WIRE)--June 28, 2006--Green Star Products, Inc. (OTC:GSPI) (GreenStarUSA.com) announced today that it has finalized negotiations with a Consortium of Companies to produce up to 500-million gallons of Biofuels annually within five years.

GSPI President, Joseph LaStella, stated, "The GSPI Consortium of companies represent all the various elements required to create a successful World-class venture both economically and practically." Additional companies have indicated they will be coming on board shortly.

The GSPI Consortium will construct complete BioRefinery facilities incorporating both biodiesel with adjacent ethanol production facilities. The ethanol facility will utilize waste agricultural products such as corn stover and switch grass (see GSPI press release May 15, 2006). These factors present a unique opportunity for the GSPI Consortium to become one of the major alternative fuels producers in the United States and the World. Biofuels, such as biodiesel and cellulosic ethanol, significantly reduces harmful fuel emissions, including global warming gases, while being cost competitive with conventional fossil fuels.

BIODIESEL

Mr. LaStella stated, "On the biodiesel technology side of the equation, GSPI has already demonstrated 3 1/2 years of commercial production of biodiesel in its proprietary, continuous flow process reactor system, which is also a waterless production process." The GSPI system has many financial advantages, including a commercial reactor, which converts feedstock to biodiesel 30 times faster than industry standards (see GSPI press release May 23, 2006). Other advantages include construction costs of 60% less than the industry's average costs with completion of plant construction in 14 weeks versus
14 months for a standard biodiesel plant.

BIOMASS ETHANOL

The other side of the technology equation concerns cellulosic-ethanol production.

GSPI for many years has predicted and supported the fact that long-range future of ethanol production will not be from corn but from waste agricultural products (wood chips, rice and wheat straw, corn stover, orange peels, etc.); and cellulosic portion of the municipal solid waste.

On January 31, 2006, President Bush delivered the State of the Union Address at the U.S. Capitol in Washington, D.C., stating, "So tonight, I announce the Advanced Energy Initiative -- a 22-percent increase in clean-energy research -- at the Department of Energy." The President also added, "We must also change how we power our automobiles ... We'll also fund additional research in cutting-edge methods of producing ethanol, not just from corn, but from wood chips and stalks, or switch grass. Our goal is to make this new kind of ethanol practical and competitive within six years."

On Larry King Live on May 17, 2006, David O'Reilly, Chairman and CEO of energy giant Chevron, said, "It is true, cellulose ethanol is almost like the Holy Grail. If it works, it changes the game. So I'd say if you can crack the cellulosic code, that will be an even bigger deal than 'The Da Vinci Code'."

GSPI's history in "biomass-to-ethanol technology" results from a long-term association with its strategic partner Pure Energy Corporation (PEC) (pure-energy.com), a company with 15 years experience in ethanol conversion technology.

Irshad Ahmed, President of PEC, is a well-known published industry leader in the biomass technology field with 25 patents in the United States and worldwide, with the latest patent issued as recently as on June 20, 2006. Mr. Ahmed has numerous technical publications and was the President of the National Biodiesel Foundation for three years. He has also served as a member on many national energy committees, such as the American Council on Renewable Energy as well as an invited member on the energy task force on renewable energy organized by Senators Hillary Clinton and Charles Schumer of New York.

PEC's conversion technology of biomass to ethanol is a proven technology based on 15 years of research including the operation of test facilities located at the Tennessee Valley Authority (TVA) Laboratory in Muscle Shoals, Alabama. TVA is a US Federal facility that was originally operated by the US Department of Energy.

Pure Energy also has several other strategic partners such as Shell Chemicals, BASF Corporation, and others. BASF Corporation (NYSE:BF) is a world leader in the agriculture/chemical industry, employs more than 81,000 people, and has posted sales last year of $54 billion. Working with PEC, BASF will participate in the planned BioRefinery projects with GSPI in Idaho and Pennsylvania.

All of the GSPI BioRefinery facilities will utilize the Pure Energy biomass-to-ethanol two-stage dilute acid hydrolysis technology process, integrated with the GSPI Waterless Continuous Flow Biodiesel Technology. There are many cost saving benefits achieved by operating both systems together.

The potential supply of biofuels will be supported by the U.S. farmer. In preparation for this support, the GSPI Consortium is active in multiple projects in the following States: North Carolina, Pennsylvania, Florida, Idaho, Washington and California. GSPI is establishing access to multiple biofuels feedstock because as demand for these feedstocks increase available supplies will surely tighten and prices will accelerate.

Mr. LaStella stated, "The farmers, both in the Unites States and foreign countries, will be the backbone of this new expanding alternate fuels global industry."

INTERNATIONAL

In order to become a major world supplier of biofuels, other long-term supplies outside the U.S. must be acquired. NRG Resources (NRG), a long-term Consortium partner, will spearhead feedstock acquisition and biofuel production outside the United States.

NRG's Executives operate businesses in the United States and also in the Countries of Ukraine, Kazakhstan and Latvia; which are Countries that now offer many excellent biofuel industry development opportunities as follows:

1) Ability to set up cultivation of feedstock for biodiesel production
2) Government support with existing business connections
3) Market access and ease of transportation
4) Massive agriculture potential
5) Inexpensive labor
6) Stable governments
7) US friendly
8) 98% literacy

NRG Resources has support from the government of Kazakhstan and the JSC Russian Railways (Russian railroad) to utilize over 5 million acres for the agricultural development of oilseed crops for the production of biodiesel. These surface rights will allow NRG to utilize local farmers to grow the feedstock to supply the biodiesel plants throughout Kazakhstan. Present crops being grown now include cotton, which can be converted into feedstock during plant development. Using cottonseed oil from existing crops will allow GSPI to immediately start building a plant in 2006 - 2007, and other feedstocks can follow later.

The Chairman of NRG Resources, Tony Vanetik, was born in Russia and has operated a number of companies with relationships that extend to the highest level of the Governments of Kazakhstan and Russia. The relationships include strong ties with the JSC Russian Railways (Russian railroad), which covers 11 time zones and is one of the largest railways in the world employing 1.26 million people.

The Russian railroad will play an important role in transporting the biodiesel to European Union (E.U.) markets and the Chinese market -- China borders the eastern part of Kazakhstan. Senior Executive of JSC Russian Railways, Mr. Serge Lipatov, is also the President of JSC TransTeleCom (a 100% subsidiary of JSC Russian Railways); and he is also a member of the Board of Directors of NRG Resources, Inc.

Some experts believe that Kazakhstan's potential oil reserves could provide significant production, to even rival Saudi Arabia's, in the not-too-distant future. Kazakhstan presently has extensive oil distribution pipelines extending to its seaports and into China.

Kazakhstan also has under construction other fuel pipelines that will connect existing lines from Kazakhstan to the E.U. These oil lines to refineries from producing fields are being constructed in anticipation of the major growth of oil production in Kazakhstan.

With the extensive infrastructure in Kazakhstan, along with the Russian railroad, GSPI's future biodiesel expansion can service local needs and supply shipments to the E.U. The E.U. has mandated that, by 2010 all diesel fuel include a B5.75 (5.75%) blend of biodiesel. Kazakhstan can then, through the pipeline network, ship biodiesel to the E.U. by locating GSPI processing plants near oil refineries.

GSPI has successfully built and operated a 10 million gallon per year test module in the summer and fall of 2005. The test module was built inside a 45-foot tractor-trailer (with room to spare). This module operated successfully for six months in Bakersfield, California and produced biodiesel from several sources of feedstock including soy oil, corn oil, beef tallow and waste vegetable oil.

GSPI, NRG and the Russian railroad will be developing the installation of biodiesel production facilities on railcars, which are much larger than the tractor-trailer utilized in Bakersfield. The reason for using railcars is to establish a complete mobile proprietary reactor/separator system to produce biodiesel from different stockpiles of feedstock along railroad spurs off the main line tracks.

The first module will be built by GSPI in the U.S. to Russian railroad's specifications and shipped to Kazakhstan for installation to commence production immediately on available feedstock. GSPI personnel, to insure protection of the proprietary technology, will build the balance of modules in Kazakhstan for installation on railroad cars to meet local standards of construction (likely at Russian railroad's facilities). NRG is already reviewing Russian engineer applicants with overseas experience to be trained in the United States.

The first GSPI Biodiesel Plant in Kazakhstan will be 20 million gallons per year to start in late 2006. This plant is expandable to 100 million gallons in years 2007 - 2008. Further expansion, as the market demand grows, will allow the GSPI Consortium to reach 500 million gallons annual production of combined ethanol and biodiesel fuels by year 2011. Demand for clean fuel at a reasonable cost could accelerate this time frame even faster.

The GSPI Consortium is well positioned in the Biofuels Industry with its collective, proven, efficient, low-cost advanced technology base and its corporate expansion in the United States and Kazakhstan.

Forward-looking statements in the release are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including without limitation, continued acceptance of the company's products, increased levels of competition for the company, new products and technological changes, the company's dependence on third-party suppliers, and other risks detailed from time to time in the company's periodic filings with the Securities and Exchange Commission.



Copyright Business Wire 2006

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