Petron seeking ethanol supply agreements

MANILA, Philippines—Petron Corp., the country’s largest oil refiner and retailer, is pursuing potential supply or off-take agreements with ethanol producers, to further encourage more investments in the industry to boost local supply.

“We are taking the initiative to pursue off-take agreements with strategic partners so we can further increase ethanol supply from local sources,” said Petron chairman and CEO Ramon S. Ang, in a statement.

“This affirms our support for the local production of ethanol since it will drive capital investments in rural areas, create jobs and more importantly, lessen the country’s dependence on imported fuel,” Ang added.

For 2010 alone, the company has estimated that it will have to import about 60 percent of its ethanol requirements to meet the five percent ethanol-blend mandate, as provided under the 2006 Biofuels Law.

But with inadequate local supply, it is estimated that Petron will need to source more imported ethanol by 2011, when oil companies will then be mandated to have a 10-percent blend in all gasoline products.

“The essence of the law is to encourage more investments in the local biofuels industry but so far, supply hasn’t caught up with demand,” Ang explained.

“By going into supply agreements with local producers, we aim to address this imbalance and give the country a more stable and reliable supply of locally-produced ethanol,” he said.

Petron is currently the only oil company in the country with an existing supply agreement with a local ethanol producer—San Carlos Bioenergy Inc. (SCBI).

SCBI owns the country’s first integrated ethanol and co-generation plant with a capacity to produce 125,000 liters of ethanol daily. The company was also the first to purchase the first locally produced fuel grade ethanol from Leyte Agri Corp. in August 2008.

For this year alone, ethanol demand is expected to reach 219 million liters, based on the 5-percent minimum blend.

However, local ethanol producers can only supply about 38 percent of the demand or an estimated 83 million liters in 2010.

The supply is expected to come from San Carlos BioEnergy Inc., which produces 40 million liters a year; Leyte Agri Corp. with 10 million liters annually; and Roxol Bioenergy of Roxas Holdings Inc, which is expected to go onstream in 2010, with an annual production of 33 million liters.

Once the government mandates a 10-percent blend, ethanol demand is expected to increase to 461 million liters by 2011, government data project.

Source: Inquirer