Asia MTBE Demand Seen Riding on Clean Fuel Growth
Date: 22-May-06
Country: SINGAPORE
Author: Jiwon Chung
Clarence Woo, executive director with the Asian Clean Fuel Association, said methyl tertiary butyl ether (MTBE) could be the best choice for Asia, where demand for cleaner non-oil energy resources is set to rise with tighter environmental standards and high oil prices.
Asia already accounts for 25 percent of global MTBE demand, as it consumed more than 4 million tonnes last year, industry data showed.
"MTBE helps to reduce harmful exhaust emissions by enhancing octane ratings and improving fuel combustion. It is also extremely cost effective and helps expand gasoline volume," Woo told Reuters.
Asian prices of MTBE have jumped 35 percent from the start of 2006, bolstered by a regional gasoline shortage, as refiners struggle to meet growing demand for transport fuels. But prices have dropped below benchmark 92-octane gasoline since US bans.
The use of the chemical additive in the United States, the world's largest energy consumer, is being phased out, as several states banned it as a carcinogen polluting ground water.
The US oil industry has switched from MTBE to ethanol, a fuel typically made from corn or sugar, as the additive of choice for the less polluting reformulated gasoline that is now required at a third of the nation's pumps.
A handful of US gasoline suppliers are still selling fuel containing MTBE, experts say, citing logistical problems getting the anti-smog additive ethanol.
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Woo said that MTBE had been viewed as harmful to human health due to negative publicity from the US, although it does not emit toxic fumes into the air.
He said some states had chosen to blame the contamination of underground water supply on MTBE use, rather than fixing the source of the problem, which was leakage of the chemical from underground tanks storing the MTBE and pipes.
Ong Eng Tong, a Singapore-based fuel consultant, said the risk of MTBE use is its polluting effect on water, not air.
"Unlike the US, the risk of water contamination in this region (by using MTBE) is low because of the way they built tanks and pipes," Ong said, adding that the tanks are usually enclosed in a vault above ground.
However, competition from ethanol for blending into Asian gasoline is likely to grow as producers such as China boost domestic output in an effort to cut back on costly imports.
"Although some Asian countries like Thailand has been promoting the use of ethanol to support their farming sectors, high production cost will limit the growth of ethanol blended motor fuel in the region," Woo said.
"Some countries are experimenting with ethanol-blended gasoline to reduce their dependence on oil products with limited success, and this is primarily because of corresponding price increase of ethanol and a shortage of raw materials," he added.
Gasoline mixed with ethanol is also more difficult to handle than MTBE blends because it cannot be shipped by pipeline and must be carried in trucks or rail cars.