Tuesday, January 15, 2008

PTT says biodiesel supplies are secure


PTT says biodiesel supplies are secure


A worker fills used vegetable cooking oil into a container before being processed to be used as biodiesel at a petrol station in Bangkok. - AFP

PTT Plc and Bangchak Petroleum Plc have insisted their B2 and B5 biodiesel blends will not be affected by the looming palm oil shortage and price hikes due to their secured supply of raw materials.

''So far, we have no such problem as long as we can maintain the growth of our biodiesel sales but it is uncertain if biodiesel sales will grow significantly in the future,'' said Wattana Opanon-amata, Bangchak Petroleum's senior executive vice-president.

The government will enforce the mandatory use of biodiesel next month in B2 fuel, a mix of 2% palm oil (B100) and 98% petroleum diesel. The effort is to cut oil imports and carbon emissions. Initially, B2 would be used to replace petroleum diesel.

After making B2 mandatory, motorists would be pushed to accept B5, or 5% palm oil and 95% petroleum diesel mix.

Cooking oil manufacturers have blamed the government's policy to produce more biodiesel for the looming shortage of palm oil.

Mr Wattana said that Bangchak, a majority state-owned oil refiner and marketer, sold 4-5 million litres per month of diesel, including B5, with sales growth of 3-5% per year.

Bangchak runs its own plant to produce 300,000 to 500,000 litres per month of B100 from two sources of raw materials, used vegetable oil and crude palm oil.

B100 is used to mix with petroleum diesel for making biodiesel.

Since Bangchak's B100 production accounts for 10% of total diesel sales, the company has contracts to buy crude palm oil from other extractors to make B5 for the remaining 90%.

''Production costs of B100 will go up if there are crude palm oil supply and price problems,'' Mr Wattana said.

However, the Energy Ministry also has a hand in deciding the cost of B100 under a set pricing formula in line with the world palm oil price.

Mr Wattana said Bangchak started selling B2 nationwide from last November, a few months ahead of the government's announcement to make the use of biodiesel mandatory. In Bangkok, B2 has been available in Bangchak stations since last June but the company did not publicise it widely.

A senior executive at PTT said biodiesel costs would not increase as a result of the possible palm oil shortage because PTT had its own B100 acquired from affiliate PTT Chemical, which owns Thai Oleo Chemical Co, the country's largest B100 manufacturer.

Thai Oleo Chemical's plant in Rayong can produce 20 million litres per month of B100, more than enough output to make biodiesel.

Based on the existing PTT sales of petroleum diesel at 450 million litres per month, PTT needs only nine million litres per month to blend with petroleum diesel for making B2 and B5. It also receives B100 supplies from one palm oil refinery in Pathum Thani, said the executive.

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