• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Calls to Confirm Ethanol Supply: Local Oil Firms Plan for Gasoline Switch

Posted on: Monday, 19 June 2006, 18:00 CDT

By Yuthana Praiwan, Bangkok Post, Thailand

Jun. 19--Local oil firms are calling on the government to clarify the amount of ethanol expected to be available by the end of this year, before they decide to stop production and distribution of premium gasoline.

A source at the Energy Ministry said oil companies wanted to ensure there was a sufficient supply of ethanol before they complied with the government directive to end sales of octane 95 gasoline at the start of 2007 as scheduled.

All premium gasoline is to be replaced by gasohol, a blend of 10 percent crop-derived ethanol and 90 percent gasoline, as part of a plan to reduce oil import costs.

"Local oil companies and traders are demanding a stated, explicit ethanol supply to help them adjust their production and distribution plans properly," said the official, who asked not to be named.

"A lot of problems would take place if production and distribution adjustment plans went ahead but there was not enough ethanol to cope with emerging demand."

More ethanol is scheduled to enter the system by the end of the year from two new ethanol plants operated by the Mitrphol Sugar Group and Thai Ekarat Co. Total production capacity would increase to about one million litres per day from 315,000 litres currently.

The termination of premium gasoline sales would boost demand for ethanol to around 850,000 litres per day, which is below supply capacity, leading to the oil companies' concerns.

"However, until now, the two new distilleries, have not confirmed whether they could commence production as scheduled," said Metta Buntherngsuk, the director-general of the Energy Policy and Planning Office (EPPO).

"Therefore, the government may need to delay the replacement of premium gasoline with gasohol."

Mr Metta said the price of ethanol made from molasses, a byproduct of sugar production, had increased to 25.30 baht per litre at present. The price is considered high but it provides an incentive to producers to process more. Once production volumes rise, economies of scale will lead to lower prices.

Kamon Kongsakulvatanasook, a retail marketing manager for Shell Co of Thailand, said the government should draw up a clear ethanol production plan quickly in order for retailers to arrange their gasoline procurement plans properly.

Retailers who are also gasohol traders may need to cut premium gasoline purchases from oil refineries to replace them with gasohol.

-----

To see more of the Bangkok Post, or to subscribe to the newspaper, go to http://www.bangkokpost.com.

Copyright (c) 2006, Bangkok Post, Thailand

Distributed by Knight Ridder/Tribune Business News.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

Source: Bangkok Post

More News in this Category