Chevron, Exxon Mobil Corp. and other major international oil companies are seeking technology breakthroughs to make gasoline and diesel from renewable sources as they shun fuel from food crops.

Companies are researching ways of making fuels from waste products and non-edible plants to supplement traditional oil supply. International Energy Agency Executive Director Nobuo Tanaka said July 2 he was "cautious" about so-called "first- generation" biofuels made from corn and sugar because they compete with food requirements.

"We are looking at the next generation of biofuels, and our program in that area is very active," Exxon Chief Executive Officer Rex Tillerson said this month at the World Petroleum Congress in Madrid. "We're looking where we can add value so it can be meaningful to us and our shareholders."

New resources will help meet energy demand that's set to rise by more than 50 percent by 2030. Production of fuels that may be an alternative to crude has been spurred by rallying oil prices that have reached record levelsz above $145 a barrel.

Biofuels production worldwide, led by the U.S. and Brazil, is expected to rise by 330,000 barrels a day this year, which is more than the gain in conventional crude output from any single non-OPEC country, according to the IEA. U.S. companies continue to make corn-based biofuels to meet government-mandated ethanol quotas, while investing in research on future energy sources.

"We

are focusing on next-generation biofuels," Chevron Vice President for Strategy and Development John Watson said. "We are not investing in food-based ethanol" research, he said.

Companies and governments are seeking to use power and fuel more efficiently and create energy from sources like the sun or wind to reduce global warming caused by combustion fuels. They must also balance production of fuel from plants with the need to leave edible crops, farm land and water for food production.

"Everyone recognizes today that biofuels are a great idea but you cannot really exploit this resource and have food prices skyrocketing around the world," said Paolo Scaroni, the chief executive officer of Italy's largest oil producer Eni SpA.

Investment in the technology remains a fraction of spending on traditional crude and natural gas reserves as companies seek to find fuels that will be economically viable.

Exxon has invested as much as $1 billion a year in research and development in the past decade and will continue doing so, Tillerson said. That compares with average companywide spending of about $25 billion a year on exploration, refining and other activities.

"Renewables are not the main business of the oil companies, which have to justify returns for investors," said Davide Tabarelli, director of Nomisma Energia, a Bologna, Italy- based energy research company. "Biofuels is the most logical segment of renewable energy for oil companies to invest in," because they produce transportation fuels, he said.

Royal Dutch Shell Plc, Europe's largest oil company, is spending $1.2 billion a year to develop energy sources that aren't reliant on hydrocarbons like crude or natural gas. That compares with total investment of $28 billion to $29 billion in traditional exploration, production and refining activities.

BP Plc will invest $1.5 billion this year in renewable energy technologies, like biofuels and wind power, as much as it has invested since 2005, Chief Executive Officer Tony Hayward said at the company's annual shareholder meeting on April 17.

"Second-generation biofuels are the playground of Shell," Sanford C. Bernstein & Co. analyst Oswald Clint said. "They've made the most headway in that area and should be focused on having a commercially viable product between 2010 and 2015."

Finding commercially viable alternative fuels could take as long as 5 to 10 years, Geoffrey Goff, senior vice president for business development at ConocoPhillips.

San Ramon-based Chevron, the second-biggest U.S. oil company, backs the viewpoint that years of research are needed.

"Within five years we'll start to see small volumes of second-generation biofuels," Jeffrey Jacobs, Chevron Corp.'s vice president for biofuels and hydrogen, said in an interview in Madrid yesterday. "It will take longer to make the fuels on an industrial scale as a viable alternative for transportation."

That could take as long as 10 years after the first small- scale demonstration plants start, he said. Chevron has invested about $2 billion in research since 2000 and is set to raise that to $2.5 billion for the next three years, he said.