Bangchak Petroleum to invest $65M in ethanol acquisitions

Bangchak Petroleum will invest roughly Bt2 billion to acquire at least two ethanol plants by next year to offset the revenue from 95-octane petrol, which the company plans to stop selling by 2012.

Company president Anusorn Sangnimnuan yesterday said the demand for ethanol to produce vehicle fuel was increasing. Bangchak forecasts that ethanol demand will jump to 400,000 barrels per day from 200,000bpd in 2009.

After Bangchak stops selling 95-octane petrol, it will lose revenue of Bt100 million per year, as the marketing margin from that oil product is higher than that of ethanol fuel products. Hence it has to seek other sources of revenue.

Anusorn said the company expected to acquire the first ethanol plant by the end of this year. The size of investment and expected production capacity were not revealed.

The company previously planned to establish the new ethanol plants by itself. The plan changed after the company considered it had no experience in producing ethanol.

"The revenue from the ethanol plants may not fully help offset the loss of revenue from discontinuing 95-octane. But we will have the security of supply for our oil production," Anusorn said.

Bangchak plans to sell ethanol to other countries such as China and Japan once it has acquired the two ethanol plants and if it faces oversupply of ethanol production for the domestic market.

Anusorn said Bangchak would provide 300 service stations offering E20 petrol by the end of this year. That number would go up to 500 stations by 2012. Meanwhile, it will provide E85 petrol at 50 stations by 2012, increasing from five this year.

source: nationmultimedia