UK-based ethanol supplier in talks with major oil companies

ED & F Man Alcohols, a United Kingdom-based international processor and distributor of ethanol, is currently in talks with major local oil companies including Petron Corp. and Pilipinas Shell Petroleum Corp. for the supply of ethanol that will be blended with gasoline.

"We are in discussions with Petron and Shell as well as other oil companies on how to move forward but there is a definite intent to follow the trend of going into bio-fuels," said Dean Nelson, regional manager for Asia of ED & F Man.

ED & F Man, the principal supplier of imported ethanol to four local oil companies that are launching ethanol-gasoline blend, is looking at cornering this growing market.

Ethanol’s three principal outlets are the beverage, industrial and fuel sectors. The fuel market accounts for over 60 percent of world ethanol production, with the main producing and consuming countries being Brazil and the USA. Ethanol is produced through both fermentation and synthetic processes. The main fermentation substrates are sugar cane, molasses, grains and cassava. Fermentation grade ethanol accounts for the majority of world production.

At yesterday’s launch of the Philippines’ first environment-friendly ethanol-blended gasoline E10 or Ethanol 10 by oil firm Seaoil, Nelson said his company is initially bringing in 2.5 million liters as part of the requirements of Seaoil, USA88 and Eastern Petroleum, which are the first companies to introduce gasoline pre-blended with ethanol.

Nelson said that within the year, ED & F Man expects to increase this volume to 25 million to 30 million liters as more gasoline stations introduce ethanol in their outlets nationwide.

In the next two years, Nelson said importation of ethanol can expand to as much as 400 million liters when all of the oil companies, including the major players such as Petron and Shell, join the fray.

"There is a big market for ethanol and other renewable fuels and this early, we are looking at the possibility of also putting up an ethanol plant," added Nelson.

Glen Yu, president of Seaoil, said that in the coming months, 400 stations of participating oil companies will be selling E10.

"Using pre-blended ethanol with gasoline will translate into consumer savings of at least P100 million yearly at the 10 percent ethanol blend," said Yu.

At Seaoil, motorists can save as much as 65 to 75 centavos per liter using two kinds of ethanol-blended gasoline.

"E10 has a higher octane rating, which means better car performance. When mixed with unleaded gas, ethanol raises the octane rating from 95 to 97 percent. Our customers can choose from the two products, but both demonstrate better combustion, which means it burns fuel more efficiently to prevent engine knocking and provides, better, smoother and cleaner engines,"said Yu.

The program kick-off will be headed by no less than President Arroyo who, will pump the first E10 gas pump dispenser at the Seaoil station along EDSA in Quezon City.

Dubbed as the "fuel for change," E10 is one of several alternative fuel oils the government is promoting to encourage new investments in renewable energy sources such as wind, coco-biodiesel and natural gas in the wake of the relentless surge in crude oil prices in the world market.

Earlier this month, Flying V announced plans to expand its distribution of its new product, a diesel pre-blended coco-methyl ester (CME) under the brand name Envirotek Bio-Diesel Premium.

The Department of Energy (DOE) said motorists will be able to generate savings from mileage efficiency amounting to nearly P16 billion from the use of bio-diesel. On the other hand, using a one percent ethanol blend in gasoline will generate savings of $2.9 million and $7.9 million by 2008 with a 10 percent ethanol blend.

E10 is a blend of 10 percent ethanol and 90 percent gasoline. Eventually, stakeholders in the ethanol industry believe that the concentration of ethanol will be increased and it will be the "gasoline of choice" in the next few years.

Ethanol-blended fuels have been accepted since the 1980s. To date, leading car manufacturers worldwide have given their approval to the use of 10 percent blend to their engines, recognizing the positive benefits of ethanol.