Oil firms brace for enforcement of fuel-blending rules

MANILA, Philippines - Oil companies in the country are preparing for stricter enforcement of the biofuel law, which requires blending of biofuel in fuel products to cut on harmful emissions. Chevron Corp. is targeting to sell gasoline with ethanol blend at 60% of its stations nationwide by yearend, and at all stations by 2011. Chevron Spokesman Mark C. Quebral told a briefing Tuesday the bioethanol-blended fuel would become available in more than 500 stations nationwide by the end of the year. Chevron, like its competitors, has just started selling gasoline with 10% ethanol blend (E-10). The law requires oil companies to sell cleaner fuel starting next month. Chevron said key terminals and depots that include Poro in La Union, Sasa in Davao City, Lapu-Lapu in Cebu, Batangas and Pandacan, Manila will start blending and distributing E-10 fuel within the quarter. At present, only 60 out of Chevron’s 840 stations sells the E-10. "More stations will be placed online in the coming months in a yearlong campaign to provide Caltex E-10 with Techron to more customers in more places all over the country. We are targetting to have the full phase of the program by 2011," Mr. Quebral said. Under the Biofuel Act of 2006, oil firms must add 1% blend of coco-methyl esther obtained from coconut — for diesel, and 2% starting February. A 5% blend of ethanol — a by-product of sugar — is required for gasoline. A 10% blend must be available by 2011, and the cleaner fuel must make up at least half of total sales of an oil company. A higher blend of biofuel cuts harmful car emissions that damage the environment and threaten human health. It is also expected to lead to lower crude oil costs. Since 2008, Chevron has committed $20 million to build infrastructure, acquire and upgrade equipment pursuant to the Biofuel Act. Meanwhile, PTT Philippines Corp. is set to launch its E-10 today. "We already put up a blending facility in Clark and we have already secured the needed ethanol for the blend," PTT Corporate Communications Officer Victor Tanjuatco said Tuesday. He added that the E-10 blend would be sold in majority of its 40 stations nationwide. Davao-based Phoenix Petroleum Philippines, Inc. also said it would be able to comply with the law. "The plans are already on stream," Phoenix Petroleum Corporate Communications Manager Angel Tuason said. Meanwhile, Jose K. Campos, Petron Corp. vice-president for marketing, said the oil firm would be able to sell 10% ethanol-blended fuel at all its Metro Manila stations by mid-February. Petron, which started selling E-10 in June, initially offered the mandated ethanol blend at only 14 of its around 1,300 stations nationwide. Petron has tied up with local ethanol producer San Carlos Bioenergy, Inc., which is set to supply Petron with around 50 million liters of ethanol per year starting February. Petron needs 60 to 70 million liters of ethanol yearly. Total Spokesman Malou Espina, meanwhile, said they were looking for local producers, but the company was quite apprehensive about carrying the E-10 since consumer may not buy it at once. Total will be able to comply with the law, she added. Seaoil Philippines, Inc. Vice-President Bernadette F. Raymundo said oil companies and the government would launch an information campaign to promote the E-10. "Hopefully by February, we’ll be able to launch the campaign since the mandate is a call for social obligation to comply with the conservation of the environment," Ms. Raymundo said, adding that Seaoil has been carrying the E-10 since 2005. She also said oil companies hope to create an ethanol market locally so that more ethanol plants will be set up here. "Right now, the existing supply is really not enough and we have to import ethanol. It will be a lot cheaper if there will be more ethanol producers locally," Ms. Raymundo said. Chevron’s Mr. Quebral said they were looking at two sources for their ethanol, namely Basic Energy Corp. and another company that he declined to identify. Basic Energy earlier said it had partnered with Canadian firm Nexum Energy Corp. to set up a 200,000 liters per day ethanol plant in Zamboanga City. Meanwhile, oil companies said the supply and market acceptance of biodiesel were not a problem. Under the law, diesel products must have 1% coco-methyl esther blend as early as 2006. "We have enough coco-methyl esther producers locally, but we are still discussing how they can provide a more competitive price since it is expensive," Ms. Raymundo said. "We have been blending 1% coco-methyl esther with our fuel as mandated by law, so I don’t think we’ll have a problem. It’s just a matter of increasing the blend," PTT’s Mr. Tan-juatco said. Mr. Quebral noted that the required increase in coco-methyl esther blend would affect the cost of Chevron products, but he could not say whether the cost would be reflected in pump prices. "Diesel pump prices are currently going down, so it may show up in the pump price or it may not," he said, adding that they would start hiking their coco-methyl esther blend on Feb. 6. Aside from Petron, Seaoil and Chevron, Pilipinas Shell Petroleum Corp. and Flying V also sell the E-10. — Ava Kashima K. Austria, BusinessWorld