By Euan Paulo C. Añonuevo
Oil giants Petron Corp. and Pilipinas Shell Petroleum Corp. are mulling the joint importation of ethanol to comply with the requirements of the Biofuels Act for next year.
Eric Recto, Petron president, said that tying up with competitors would allow the country’s biggest oil refiner to bring down its costs.
“Petron, when it needs to import [ethanol], will do so in a manner that will result in the best economics. That may include cooperating with other ethanol users,” he said.
The executive, however, said the company still has to iron out the details of the partnership with other oil firms.
Local ethanol supply was deemed insufficient to feed oil companies’ needs as production from San Carlos Bioenergy Inc. and Leyet Agri Corp.—the two local producers—is estimated at only 80 million liters a year. This is 30 million liters short of the current demand of 110 million liters.
The supply deficiency is expected to widen when the mandated ethanol blend is increased next year.
Under the Biofuels Act of 2006, gasoline sold at the pump is required to have a 5-percent blend of ethanol, which must be sourced from indigenous crops, starting 2009. By 2011, the blend would be raised to 10 percent.
Because of the insufficient domestic supply, Shell said that oil firms must jointly import their ethanol requirements.
“We broached that idea before. And at that time, we were encouraging joint shipments to bring down the cost. No one agreed [then], but at this point, people are open to the idea of bringing in joint shipments,” Edgar Chua, Shell country chairman, said.
Although importing ethanol is against the law, oil companies said they are forced to buy their requirements abroad to comply with the mandated blend.
But local ethanol makers claim that the oil firms preferred to source their requirements from abroad because it was cheaper than buying from domestic suppliers.
This however has stunted the industry, they said.
Because of this, the Ethanol Producers Association of the Philippines has called on the government to impose higher import duties on ethanol to encourage oil companies to source their requirements locally.
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