• 
• 

Published on July 29, 2007

Shell Thailand chairman Tiraphot Vajrabhaya, 54, is a staunch promoter of gasohol - petrol blended with 10-per-cent ethanol - but the eco-friendly fuel is still not widely popular here.

Shell has a nearly 20-per-cent share of the market for octane-95 gasohol, compared to PTT's 38.5 per cent and 15.3 per cent for Bangchak Petroleum.

The combined market for octane-95 gasohol was 111 million litres in May, less than half the total for petrol consumption even though gasohol is Bt3.50 per litre cheaper than comparable petrol.

"There is still a misconception about gasohol [many motorists still believe it can harm engines], even though we've issued a quality guarantee," Tiraphot says.

"So far, there has been no valid claim that gasohol really caused engine damage. Problems that have occurred had nothing to do with the fuel system.

"Another misconception is that old vehicles cannot use gasohol. In fact, it's estimated that there are only 50,000-300,000 vehicles in Thailand that actually cannot use gasohol. For the rest, gasohol is fine, " says Tiraphot, who has worked at Shell for the past 29 years.

In his opinion, the government should review its gasohol promotion policy and announce an end to the sale of the regular octane-91 petrol, instead of stopping the sale of the premium octane-95 petrol.

Following heavy promotion of domestic production of ethanol, the previous government planned to stop the production of octane-95 petrol so that most motorists would have to switch to octane-95 gasohol.

However, there was strong opposition to plan since a large number of vehicles 10 years or older would not be able to run on octane-91 petrol.

"It would be better if we decided to stop producing octane-91 petrol, since there'd be still the higher-octane 95 petrol for the rest of vehicles," Tiraphot says.

"As for petrol stations, most of their storage facilities are designed for a maximum of three products. Now we have four, namely, 91 gasohol, 95 gasohol, 91 petrol and 95 petrol, so we should remove one product. Then oil refineries may adjust their production process to produce just three products," he says.

Overall, Thailand will benefit from the gasohol policy because ethanol is produced locally from agricultural crops such as tapioca. The country's fuel import bill would be reduced by at least 10 per cent if most people used gasohol, which is also more than 10 per cent cheaper than petrol due to a government subsidy.

"Even though the mileage might be one to two per cent less, the cost saving is still significant," Tiraphot says, adding that Thailand was among the first countries in the region to introduce gasohol.

Australia and the Philippines are also promoting gasohol, while Brazil - the world's leading producer of ethanol - now sells 100-per-cent ethanol for vehicles, says Tiraphot, who is also responsible for Shell's retail operations in 11 other regional markets.

As a global organisation based in the United Kingdom, Shell runs its various businesses regionally and globally. The regional headquarters for its retail business is Singapore.

Shell's retail network in Thailand has about 600 petrol stations, making it the country's second largest after PTT.

The retail business is part of the downstream oil sector, but its profit margins are relatively low due to cutthroat competition and an oversupply of petrol stations in Thailand.

However, oil firms are currently enjoying huge profits in the upstream sector, especially from oil exploration and production, as crude prices have shot up to a record high.

Nophakhun Limsamarnphun

nop1122@yahoo.com