Thai Gasohol At A Loss As Sugar Price Rises

[george]

Thai gasohol at a loss as sugar price rises

BCP: Gasohol losses may curb E20 sales

Ethanol prices reflect sugar spike

BANGKOK: -- Bangchak Petroleum Plc may delay expanded sales of E20 gasohol at its stations as high ethanol costs are causing it to lose money on gasohol sales, says president Anusorn Sangnimnuan.

The company had planned to sell E20, containing 20% ethanol, at 200 stations by the end of this year, up from 120 now.

Ethanol prices have risen to 25 baht a litre from 20 baht last month and 18 baht in January in line with the costs of molasses because of a global sugar supply shortage. Refineries are selling pure petrol at 16-18 baht.

"This would prompt oil companies to promote petrol rather than ethanol blends since the more gasohol they sell, the more money they lose," said Dr Anusorn.

"If the ethanol price goes beyond 25 baht per litre, we will delay the expansion plan for gasohol. The appropriate price of ethanol should be 20-21 baht, otherwise the business won't be viable."

Thailand's third largest service-station operator no longer sells pure petrol. Aggressive marketing of the Bangchak brand as a green-fuel leader has made gasohol its best-selling petrol product.

Bangchak needs 5 million litres a day of ethanol to blend with for all its E10, E20 and E85 fuels. Demand for E20 is still low as not many cars can use the fuel.

"It is clear that E20 demand will rise year by year, while those vehicles that need to consume pure petrol will eventually be off the roads," he said.

He hopes to see the government show a clearer intention to make Thailand a leader in alternative fuels.

Energy Minister Wannarat Channukul said the government still supported alternative fuels even though the price at the moment was not competitive with mainstream fuels.

He said the government would continue with subsidies, tax measures and Oil Fund levies to help make gasohol and other fuels competitive.

"We will seek a win-win solution for all parties including ethanol producers, oil traders and motorists," he said. "Thailand needs to continue its strategy of supporting alternative fuel, no matter how much crop prices increase, since we are unable to depend too much on oil imports."

Gasohol E20 currently costs 12 baht per litre less than premium petrol and six baht less than regular petrol.

The ministry expects ethanol consumption will rise to 1.45 million litres per day at the end of this year and to 2.45 million litres in 2010 from 1.22 million litres currently.

The Thailand Automobile Institute forecasts there will be 610,000 E20-compatible vehicles in 2011, double today's total.

Thailand's largest oil company, PTT Plc, sells E20 at 21 stations across the country and E85 at three stations, and says it has no plans to scale back despite high ethanol prices. "We invested a lot in facilities for gasohol. We need to utilise them as much as possible and we are still making a profit from gasohol," said Prajya Phinyawat, a PTT senior executive vice-president.

PTT's sales of E85, containing 85% ethanol, are 8,000 litres per month, while E20 sales have doubled from last year to 2.7 million litres per month.

Source from

Bangkok Post: 27 Jul 2009

WWW.BANGKOKPOST.COM

BCP: Gasohol losses may curb E20 sales

Ethanol prices reflect sugar spike

Bangchak Petroleum Plc may delay expanded sales of E20 gasohol at its stations as high ethanol costs are causing it to lose money on gasohol sales, says president Anusorn Sangnimnuan.

The company had planned to sell E20, containing 20% ethanol, at 200 stations by the end of this year, up from 120 now.

Ethanol prices have risen to 25 baht a litre from 20 baht last month and 18 baht in January in line with the costs of molasses because of a global sugar supply shortage. Refineries are selling pure petrol at 16-18 baht.

"This would prompt oil companies to promote petrol rather than ethanol blends since the more gasohol they sell, the more money they lose," said Dr Anusorn.

"If the ethanol price goes beyond 25 baht per litre, we will delay the expansion plan for gasohol. The appropriate price of ethanol should be 20-21 baht, otherwise the business won't be viable."

Thailand's third largest service-station operator no longer sells pure petrol. Aggressive marketing of the Bangchak brand as a green-fuel leader has made gasohol its best-selling petrol product.

Bangchak needs 5 million litres a day of ethanol to blend with for all its E10, E20 and E85 fuels. Demand for E20 is still low as not many cars can use the fuel.

"It is clear that E20 demand will rise year by year, while those vehicles that need to consume pure petrol will eventually be off the roads," he said.

He hopes to see the government show a clearer intention to make Thailand a leader in alternative fuels.

Energy Minister Wannarat Channukul said the government still supported alternative fuels even though the price at the moment was not competitive with mainstream fuels.

He said the government would continue with subsidies, tax measures and Oil Fund levies to help make gasohol and other fuels competitive.

"We will seek a win-win solution for all parties including ethanol producers, oil traders and motorists," he said. "Thailand needs to continue its strategy of supporting alternative fuel, no matter how much crop prices increase, since we are unable to depend too much on oil imports."

Gasohol E20 currently costs 12 baht per litre less than premium petrol and six baht less than regular petrol.

The ministry expects ethanol consumption will rise to 1.45 million litres per day at the end of this year and to 2.45 million litres in 2010 from 1.22 million litres currently.

The Thailand Automobile Institute forecasts there will be 610,000 E20-compatible vehicles in 2011, double today's total.

Thailand's largest oil company, PTT Plc, sells E20 at 21 stations across the country and E85 at three stations, and says it has no plans to scale back despite high ethanol prices. "We invested a lot in facilities for gasohol. We need to utilise them as much as possible and we are still making a profit from gasohol," said Prajya Phinyawat, a PTT senior executive vice-president.

PTT's sales of E85, containing 85% ethanol, are 8,000 litres per month, while E20 sales have doubled from last year to 2.7 million litres per month.

-- Bangkok Post 2009-07-27

[slapout]

If the refineries are selling petrol at 16 to 18 baht/liter as noted above, why is the pump price so much higher?

[ballbreaker]

If the refineries are selling petrol at 16 to 18 baht/liter as noted above, why is the pump price so much higher?

Things like transportation cost and overhead for employees, buildings and of course they want to make a profit.

[Gary A]

Gee, does this mean that the farmers might get better prices for casava and sugar cane? Don't bet on it. Only the politicians and wealthy middlemen will reap the profits.

[zzaa09]

If the refineries are selling petrol at 16 to 18 baht/liter as noted above, why is the pump price so much higher?

Things like transportation cost and overhead for employees, buildings and of course they want to make a profit.

Yes. All this applies. Especially the profit motive. Free market?

[slapout]

Last weeks price of diesel Singapore market 66 usd/bbl. Maybe this is part of the reason the PM is asking some hard questions of PTT, their mark ups, refining charges etc. Fuel prices have approached gouging status as free market and competition do not seem to be a part of marketing strategy here in Thailand.

[Thai at Heart]

Last weeks price of diesel Singapore market 66 usd/bbl. Maybe this is part of the reason the PM is asking some hard questions of PTT, their mark ups, refining charges etc. Fuel prices have approached gouging status as free market and competition do not seem to be a part of marketing strategy here in Thailand.

Even though it breaks many laws of the relevant countries, many companies have "exclusive" distributor deals in Thailand. hel_l, entire dynasties of wealth have been built on it in this part of the world.

Every Thai businessman's dream is to do nothing more than open the container, pay the relevant people and sit and wait for the market to come to him.

[Yoshitaka]

For real low cost, try CNG.