AE Biofuels Announces Plans to Construct a 75 Million Gallon Argentina Biodiesel Plant With DS Group.

Project Near Rosario Includes 25,000 Tons Annual Glycerin Production

CUPERTINO, Calif. -- AE Biofuels, Inc., (OTCBB: AEBF) a vertically integrated biofuels company, today announced that it has signed a joint development agreement with DS Development, a subsidiary of DS Group, to build, own and operate a 75 million gallon per year production biodiesel plant near Rosario, Argentina. Soy oil will be the primary feedstock as Argentina is one of the world's largest producers and exporters of soy oil. Construction of the biodiesel plant is subject to obtaining necessary project financing.

The biodiesel facility will be built by De Smet Engineers & Contractors, a recognized global leader in the construction of biodiesel plants. Technology and engineering will be provided by Desmet Ballestra, which has operated in Argentina for 28 years. Desmet Ballestra is also the technology partner for AE Biofuels' current palm oil and glycerin refining projects and 50 million gallon biodiesel plant in Kakinada, India.

The facility will have a feedstock capacity of 250,000 tons per year and is expected to produce 75 million gallons of biodiesel and 25,000 metric tons of glycerin annually. The glycerin produced at the Argentina plant may be processed into pharmaceutical-grade glycerin at the company's Kakinada, India plant.

"Today marks an important milestone for our company," said Eric McAfee, chairman and CEO of AE Biofuels, Inc. "By establishing a foothold in Argentina for our expanding biodiesel operations, we are able to take advantage of a beneficial tariff environment that would currently provide an operating margin of approximately 25 percent while contributing materially to the local economy. This plant will increase our biodiesel production capacity during a global shortage of diesel fuel and record high diesel prices and provide significant value for our shareholders. We are pleased to partner again with Desmet, a company known worldwide for its quality work in the biofuels arena."

"This Project represents for DS Development a great opportunity to confirm a strong position in providing turnkey support & projects for the Bioenergy sector. Partnering with AE Biofuels opens the door for new opportunities in the development of alternative and second generation Biofuel Projects," said Ivan Stocker, Director of DS Development.

AE Biofuels, Inc. will own 90 percent of the entire project. Plant permits and feedstock agreements are in place. Plant completion is expected in late 2009.

About AE Biofuels

AE Biofuels, Inc. is a global vertically integrated biofuels company developing sustainable solutions to the world's renewable energy needs. The company is commercializing its patent-pending next-generation cellulosic ethanol technology that enables the production of biofuels from both non-food and traditional materials. AE Biofuels owns or has optioned five permitted ethanol plant sites in the United States, and its Universal Biofuels subsidiary owns a 50 million gallon biodiesel facility on the east coast of India. For additional information about AE Biofuels, please visit www.aebiofuels.com.

About DS Group

DS Group (formerly "De Smet Group") was originally established in 1946 with the principal aims of commercializing processing equipment and building plants for the edible oil industry. DS Group's knowledge of the agricultural processing sector has been instrumental in the development of its industrial businesses. For more than 60 years, DS Group has been building industrial plants. Today, De Smet Engineers & Contractors perpetuates this tradition. More recently, DS Group has launched DS Development, a subsidiary fully dedicated to the development of projects in the agro-industry and is developing in partnership a sizeable production portfolio of renewable fuels. For additional information about DS Group, please visit www.ds-group.be.

Forward-Looking Statements

The information contained herein includes forward-looking statements. These statements relate to future events or to the company's future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Investors should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond the company's control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements.

Any forward-looking statement reflects the company's current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to operations, results of operations, growth strategy and liquidity, and in particular our ability to obtain project finance for the project, market conditions, and government laws and regulations . The company assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.