Eastern Petroleum to set up P1.5B ethanol plant

Eastern Petroleum Corp. plans to put up a $30-million (P1.5 billion) ethanol facility in Negros.

This will ensure the oil player access to competitively priced ethanol and allow it to comply with the mandated 10-percent ethanol blending.

Eastern Petroleum president Fernando Martinez said the company, through subsidiary Eastern Renewables and Fuels Corp., targets to build a facility in the Visayas. The plant will have a capacity to produce about 100,000 liters per day, or roughly 35 million liters of ethanol a year.

Although Eastern Petroleum was still keen on developing an ethanol plant with the same capacity in Isabela (also worth $30 million), it expects to complete the Negros facility earlier, given the availability of feedstock in the area.

The ethanol project in Isabela, he explained, was still in the feed stock development stage. For the Isabela plant, Eastern targets to use cassava, whereas for the Negros facility, the company intends to use sugarcane or molasses.

Martinez did not disclose other details of the planned Negros ethanol plant.

He, however, said its operations would help shore up ethanol supply in the domestic market. The output of the two planned ethanol projects will be sold to the domestic market, Martinez said.

Oil companies are currently mandated to produce gasoline with 5 percent ethanol blend. Under Republic Act No. 9367, or the Biofuels Act, companies will have to increase this ratio to 10 percent by 2011. The deadline for compliance, however, was extended to August this year.

By next month, oil companies will have to blend gasoline with 10 percent ethanol, with exemptions given to higher and lower octane gasoline.

The 10 percent ethanol blending will be fully implemented beginning February 2012.

According to Martinez, the 10 percent blending will increase ethanol requirements in the country to about 500 million liters a year, from only 250 million liters at a 5-percent blend.

Demand for ethanol this year alone was estimated to reach 265 million liters, while estimated supply remained marginal at 29 million liters. The supply estimate was based on assumptions that San Carlos Bioenergy Inc. (SCBI) and Roxol Bioenergy will resume commercial operations either in August or September.

SCBI’s facility was designed to produce as much as 40 million liters a year while Roxol Bionergy has the capacity to generate 33 million liters a year.

It was not clear whether the ethanol plant of Leyte Agri, which can produce 10 million liters yearly, was operating.

To enable oil companies to meet the government’s ethanol blend requirements, the National Biofuels Board had allowed them to import a maximum of 236 million liters of ethanol.