With a banner reading " Palm Oil Kills Forests and Climate," Greenpeace's Rainbow Warrior was anchored next to an India-bound palm oil tanker at Dumai port on Sumatra island, the group said in a statement Friday.
Activists maintain the crop is planted on forest land cleared by fires that unleash millions of tons of carbon dioxide - a greenhouse gas. They say this defeats the purpose of developing palm-based biodiesel fuel as a renewable source of energy that does not contribute to greenhouse gases.
"The logging, draining and burning of Indonesia's peat land forests releases a massive amount of stored carbon back to the atmosphere," said Sue Connor, Greenpeace International forests campaigner. "That is why we're here."
The protest comes three weeks before scientists and government ministers from around the world were set to meet on the Indonesian island of Bali to come up with ways to slow the pace of global warming.
The blockade of the ship laden with 33,000 metric tons (36,400 U.S. tons) of palm oil began on Thursday, Greenpeace said.
Developers in Indonesia have been planting vast tracts of oil palms to tap into a surge in global demand for biofuels.
They say the planting is taking place on long-since deforested land, but green activists allege that pristine forests are being chopped down and torched to make way for the crop.
Greenpeace claimed the exporter, Permata Hijau Sawit, had sourced palm oil from companies involved in the destruction of rain forests and the starting of forest fires on Sumatra . It was not immediately possible to contact the company for comment on those claims.
A Greenpeace spokesman said police had not attempted to end the blockade.
Indonesia was aiming to export 17 million metric tons of palm oil in 2007, according to government statistics.