Chemrez shifts marketing focus to Philippines

11 December 2006 03:10  [Source: ICIS news]

By Shibu Itty Kuttickal

SINGAPORE (ICIS news)--Chemrez, Philippine biodiesel and chemicals producer, has shifted its biodiesel marketing focus to the domestic market to take advantage of a Biofuels Act that is likely to be passed by the country’s legislature in early 2007.

The legislation is expected to propose an initial blend of 1% biodiesel with mineral diesel and 5% bioethanol with petrol. This is envisaged to increase to 2% and 10% respectively within the next two years.

"Since the law will be implemented at least one quarter earlier than expected, we will sell more of our production locally," Chemrez chief financial officer Francis Caluag said late on Friday.

"The domestic market will be more lucrative for us since the Philippine National Standard for biodiesel allows only coco-biodiesel and jatropha biodiesel (which is not available in the country) for blending with regular diesel," he said.

Chemrez produces coco-biodiesel from coconut oil, which the company believes has a competitive advantage over biodiesel produced from other vegetable oils in that it was the best winter biodiesel and had less nitrogen oxide emission.

"As the country’s largest and only modern producer, we have a clear advantage in quality, availability and capacity which can be translated into favourable pricing in the domestic market. We are also the only producer with a fairly-developed supply chain logistics capability to service the petroleum industry’s biodiesel requirements," he added.

The move also meant that Chemrez now recognised that penetrating the premium European market was no easy task

"We recognise that Europe represents a far greater growth potential for us in the medium term but we need to expend more efforts in technical marketing to educate Europe on the superior qualities of coco-biodiesel over all other biodiesels," Caluag said.

Chemrez has a 68m litres/year coco-biodiesel capacity against the potential total domestic market estimated at 70m litres/year at the initial legislated mandate of 1% blend with petroleum diesel.

The total Philippine consumption of petroleum diesel peaked at 7 billion litres a year, of which about 55% was for the transport sector.

Caluag agreed that Europe could pass regulation against Asian biodiesel if the production of rapeseed oil, the major feedstock for European biodiesel, turns out sufficient for both the fuel and food needs.

"This can happen if rapeseed output is able to keep up with the growth in local biodiesel production capacity and consumption. Otherwise, Europe will have to import palm and coco-biodiesel from Asia if it is short of rapeseed feedstock," he added.

By: Shibu Itty Kuttickal
+65 6780 4359

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