The Energy Policy Administration Committee (Epac) has decided to sell only diesel blended with 5% palm oil-derived methyl ester at petrol stations from this Saturday, instead of the 7% formula, as it is struggling to deal with soaring global oil prices.
The change does not decrease the diesel price, but should ease the government's financial burden, as the state put a cap on diesel prices at 30 baht a litre since last year.
Called biodiesel B5 because of the 5% methyl ester mix, the fuel is a single-grade biodiesel that Epac estimates will be sold domestically until the end of March.
The mix of diesel with methyl ester aims to reduce dependence on oil and support palm oil prices, but the authorities need to reduce the methyl ester proportion as prices of both diesel and methyl ester have increased.
The reference price of methyl ester, also known as purified biodiesel, or B100, currently stands at 57.28 baht a litre, while the ex-refinery price of high-speed diesel is 24.71 baht a litre, according to the Energy Policy and Planning Office (Eppo).
Methyl ester was priced at 46.88 baht a litre in November last year.
The reduction of methyl ester to 5% followed a meeting of Epac, chaired by Energy Minister Supattanapong Punmeechaow, on Monday night. Global oil prices remain at high levels, he said.
Mr Supattanapong said the reduction will help the state Oil Fund, which is supported by 20 billion baht in loans from commercial banks as it subsidises the diesel price cap.
Epac earlier postponed the offering of 10% and 20% methyl ester blended diesel, forcing fuel retailers to sell only biodiesel B7 from Dec 1 last year to March this year.
For the sale of biodiesel B7, subsidies would fall to 2.95 billion baht a month, down from 4 billion a month, Eppo said earlier.
Global oil prices are expected to remain high and fluctuate throughout this year, said Montri Rawanchaikul, chief executive of PTT Exploration and Production Plc (PTTEP). A lack of new oil and gas drilling during the pandemic led to a drop in petroleum production, he said.
As more countries reopened their borders, one result was higher demand for energy, said Mr Montri. Once demand and supply of oil stabilise, global oil prices will range from US$70-75 per barrel, according to PTTEP.
The company expects its petroleum sales to rise by 14% this year to 417 kilo barrels of oil equivalent per day (KBOED), up from an average of 410 KBOED last year, thanks to increased gas production assets the last couple of years.
