Thailand to revive US$700M land bridge plan that would allow it to become oil trading, biofuel hub in Southeast Asia, continue encouraging higher use, production of ethanol-blended gasoline, says Thailand's energy minister

Bdebbie Garcia

LOS ANGELES , October 7, 2011 (Industry Intelligence) – Thailand aims to become Southeast Asia’s oil trading and biofuel center, challenging Singapore’s lead, by revising a land bridge plan and encouraging increased consumption and production of green gasohol, said Thailand’s energy minister on Thursday, reported Reuters on Oct. 6.

Pichai Naripthaphan did not give details as to when the plan would take effect, but projected that demand for ethanol will rebound next year with the resumption of Oil Funds levied on some gasoline and diesel starting mid-January.

The land bridge plan, which was drafted 20 years ago and estimated to cost US$700 million, proposes a 112-mile trans-peninsula rail, road and pipeline connecting the Gulf of Thailand and the Andaman Sea, which would expedite transport of crude oil from the Middle East for refining.

The government’s move recently to enforce Oil Funds levies will entail gradual price increases for liquefied petroleum gas and natural gas for vehicles, said Pichai, Reuters reported.

Thailand also wants to boost its crude reserves to 29 days from the current 18 days, said Pichai, noting that, in this effort, state-controlled PTT PLC is being encouraged to invest overseas, particularly in the neighboring countries of Myanmar, Cambodia and Vietnam.

In Myanmar, Thailand is negotiating on concessions for four or five new petroleum fields, both onshore and offshore; and in Cambodia, it is trying to settle a territorial dispute next year, Pichai said, reported Reuters.

In addition to reviving the Oil Funds collections, Thailand plans to push demand for ethanol by 700,000 to 800,000 liters per day by discontinuing sales of 91-octane gasoline in late 2012, said Pichai.

Domestic ethanol demand of 1.5 million liters/day fell sharply in the past couple of months, after gasoline price levies were removed, forcing ethanol producers to export more. Gasoline demand increased 20% in late August, Pichai said, Reuters reported.

If Thailand becomes a trading hub, its ethanol capacity should jump to 9.0 million liters/day from 3.0 million liters/day now, said Pichai.

A new power development plan is being drafted by the ministry that will boost renewable power to 25% of the country’s fuel in the next decade, up from 20% in the previous plan, while natural gas will decline to 70%.

The focus of the new plan will be more on green power and clean-coal power production. Renewable energy now accounts for about 6% of Thailand’s fuel, reported Reuters.

The primary source of this article is Reuters, London, England, on Oct. 6, 2011.

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