Thailand will ban imports of the gasoline additive methyl tertiary butyl ether (MTBE) by end-2006 as part of a plan to reduce the country's dependence on imported oil, Energy Minister Prommin Lertsuriyadej said on Tuesday.
"The cabinet today approved a ban on imports of MTBE by the end of 2006 and we will redress that with ethanol to make gasohol-95," Prommin told a news conference.
Prommin said that Thailand imports more than 90 percent of its oil needs, leaving it vulnerable to volatile international benchmark prices.
US crude shot to a 21-year peak at $41.85 a barrel on Monday, the highest price since trading began on crude futures in New York in 1983, on worries that global supplies might not be able to keep up with sizzling demand, especially in China and the United States.
"We are almost totally dependent on imports. We are in an energy crisis. We have to adjust our circumstances during this situation and try to utilise energy more efficiently," Prommin said.
He said that gasohol-95 was 0.5 baht cheaper than the equivalent 95-octane gasoline and the government planned to encourage the use of the biofuel by widening the gap by raising the import duty on the octane enhancer, MTBE.
Thailand currently charges an import duty of one percent of the price of MTBE. Prommin did not say how much the duty would be increased by.
According to energy ministry estimates, Thailand uses roughly one million litres a day (l/day) of MTBE, which is added to gasoline to boost octane levels and produce a cleaner-burning fuel to reduce smog.
Gasohol is made by blending ethanol into gasoline. Alcohol-based alternative additives also improve the emissions quality of gasoline.
Prommin said Thailand consumes 33,000-38,000 l/day of ethanol, the maximum produced by local suppliers, but he forecast that production would rise to one million l/day by 2006.
Gasohol-95 is used in passenger vehicles and sold only at retail outlets owned by PTT PCL and Bangchak Petroleum PCL in selected areas, mainly in Bangkok.
Latest data from PTT, Thailand's top energy firm, showed that Thailand consumed about 134,000 barrels a day (bpd) of gasoline in the first two months of 2004, out of a total oil demand of 1.078 million bpd.