Germany refiners facing €400m penalty from E10 launch – BP exec

26 August 2011 17:38  [Source: ICIS news]

LONDON (ICIS)--Germany’s refiners are facing penalties of up to €400m ($571m) from the troubled launch of 10%-bioethanol blended gasoline (E10) this year, an industry executive said on Friday.

The refiners will likely seek to pass on those costs to drivers, Uwe Franke, head of BP Europa, said in an interview with German daily Westdeutsche Allgemeine. The paper provided a transcript.

“At the end of the day, oil firms will have no other options than to pass on those costs to customers,” Franke said.

Germany's refiners launched E10 because it enables them to comply with EU fuel quality standards. If they fail to comply with the standards, they face penalties, government officials have said.

Franke said it is “disappointing” that many German drivers continue to reject E10.

“We had expected a significantly higher acceptance of E10, given that about 90% of cars on Germany’s roads can run on E10,” he said.

However, over the long run, E10 should gain ground in the market, Franke added.

Germany approved E10 for sale at the pump since 1 January, but the fuel was not accepted as many drivers feared it could damage the engines of their cars. The resistance prompted refiners to re-introduce E5, which they had stopped supplying after launching E10.

BP’s Franke also said he expects crude oil prices to remain high in the future, despite the improvement in Libya, as it could take years before oil production in that country may be restored to previous levels.

Also, the situation in the Middle East remains volatile, Franke said.

At the same time, China, India and other emerging economies continue to show strong oil demand, despite recent weakness in the global economy, he added.

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By: Stefan Baumgarten
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