Thailand: Warning on ethanol shortage

Thailand: Warning on ethanol shortage

Mismanagement among ethanol factories and a delay in molasses production
this year is likely to cause an ethanol shortage this month, for the first
time in several years, according to the Energy Business Department.

Director-general Witoon Kulcharoenwirat said the government needs a plan to
prevent a potential ethanol shortage as major oil retailers, including PTT
Plc, Shell and Chevron, have raised concerns about the potential shortfall
of ethanol.

The three major fuel retailers have asked the department to start using
ethanol reserves, which would be sufficient for 3.5 days.

Mr Witoon said Thailand produces an average of 4 million litres of ethanol
per day but daily consumption stands at an average at 3.6-3.8 million litres
per day.

Some oil retailers fear the shortage will span 5-6 days as demand for petrol
rose 14% over the first 10 months of this year, pulling up demand for
ethanol, which is blended in every type of petrol.

The department will discuss possible solutions with major oil retailers next
week.

In addition, the department will send its staff to closely monitor ethanol
producers' production plan, stock, and distribution in order to manage the
situation.

"We may allow oil retailers to use their ethanol inventories if there is any
shortage, but concerns over ethanol shortage will reemerge when we enter the
drought season," Mr Witoon said, referring to molasses and tapioca, which
are major sources for ethanol production.

The development of biofuel officially started in Thailand a decade ago when
global oil prices rose above US$100 a barrel, forcing the government to
issue a mandatory asking oil retailers to blend ethanol with petrol in order
to help reduce oil import expenses.

Governmental and industry officials have admitted there could be an ethanol
shortage in December largely due to mismanagement of ethanol production as
well as a delays of the sugar crushing season this year, which consequently
delayed the production of molasses, a byproduct of sugar that is a raw
material for ethanol.

Deputy director-general Wisak Watanasap said the major reason of the
shortage is that major molasses-made ethanol manufacturers have shut down
their production for maintenance at the same time, resulting in substantial
fall in ethanol production over the past few months.

"We will discuss with producers and set up an agreement where they will not
shut down at whim again," Mr Wisak said. "The maintenance shutdowns should
be discussed before taking place in order to secure the country's energy
supply."

Another cause of the ethanol shortage is the delay of Thailand's 2016-17
sugar crushing season, which also delays molasses production, according to
Sirivuth Siamphakdee, honorary president of the Thai Ethanol Manufacturing
Association.

Thailand's sugar crushing season normally starts in early November. This
year's crushing season was delayed by unfavourable weather that disrupted
the sugarcane harvest.

"Normally, molasses output comes to the market 16 days after the start of
crushing season," Mr Sirivuth said.

"This year we needed to delay the crushing season, which also delayed the
production of molasses, leading to the possibility of an ethanol shortage,"
he explained.

Thailand normally produces around 4 million tonnes of molasses a year.
Around 1.2 million tonnes go to the liqueur industry and around 500,000
tonnes are exported, leaving around 2.5-2.7 million tonnes for ethanol
industry.

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Link to Original Article:
http://www.bangkokpost.com/business/news/1149521/warning-on-ethanol-shortage

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com