Energy giant PTT Plc has joined hands with Mitr Phol Sugar Corporation, Asia's biggest sugar producer, to develop an ethanol production and distribution hub in Chaiyaphum with a daily capacity of 500,000 litres.
Construction of the facility, which will produce E85, a blend of 85% denatured ethanol fuel and 15% petrol, will be completed this year and will mainly serve demand in the Northeast, said PTT senior executive vice-president Saran Rangkasiri.
The partnership will see PTT deliver petrol to blend with ethanol made by Mitr Phol. The agreement with Mitr Phol is aimed at cutting transportation costs by creating a manufacturing and distribution hub for the region.
Prior to this, PTT purchased 400,000 litres per day of ethanol from Mitr Phol's Chaiyaphum plant and shipped it to Bangkok for blending E85 and transported the fuel to the Northeast and other regions.
This agreement will cut transport costs for more than 2,000 shipments a year.
PTT plans to expand E85 to 300 locations nationwide by year-end from 70 at present as demand for ethanol is expected to double to nearly 2 million litres this year.
Mr Saran said PTT is looking for other ethanol producers to build regional blending centres in the northern and southern regions. The plan would also help cut transport costs for E20, a blend of 20% ethanol fuel and 80% petrol, demand for which has risen sharply in the last two years.
PTT and Bangchak Petroleum Plc (BCP) are the only two E85 suppliers in Thailand, with PTT holding a 30% market share and BCP accounting for the rest.
Thailand's bioethanol plan aims for ethanol to replace petrol consumption by 9 million litres per day by 2020, up from nearly 3 million litres now.
Mitr Phol president Krisda Monthienvichienchai said the partnership with PTT would benefit sugar cane farmers by boosting purchases from them for ethanol production.
Mitr Phol's ethanol production plant is being upgraded to increase capacity to 500,000 litres a day. The process is expected to be completed by mid-year.
Mitr Phol also has a joint venture with PTT subsidiary Thai Oil Plc and Petro Green Co called Mae Sod Clean Energy Co, which makes ethanol in Tak province.
The 1.5-billion-baht ethanol plant has been in operation since 2009 with a capacity of 200,000 litres a day, using sugar juice as feedstock.