Malaysia raises fuel subsidy by 10%

▪ Malaysia raises fuel subsidy by 10%

The Malaysian government increased its petrol subsidy by almost 10% to ensure the price of RON 95 remains at RM1.90 (US$0.59) per liter, said Prime Minister Datuk Seri Najib Tun Razak. In his blog, Najib said the government, besides proposing a supplementary budget, would also have to increase its investment through the Economic Transformation Programme (ETP) to balance off the extra expenditure. "Transportation costs make up a considerable proportion of the rakyat's daily expenses, particularly for the urbanites. The onus is on the government to slow down and manage the ever escalating fuel cost without jeopardizing other budgeted expenditures on development," he wrote. "At the same time, the world economy is experiencing recession, mainly attributed to the Euro zone crisis and the U.S. It is my incumbent duty to mitigate the impact of such global downturn on Malaysians, as well as to maintain persistent economic growth at the same time," he wrote. (April 18, 2012)

▪ New Zealand proposes changes to vehicle emissions rules

Transport Minister Gerry Brownlee has announced plans to update the rules setting emissions standards for vehicles entering New Zealand. "The current emissions rule does not set any standards for used vehicles beyond 2012. When this rule was introduced in 2007, the intention was that a review should take place to consider when to introduce the standard known as Japan 09," Brownlee said. He added that a lot has changed since the 2007 emissions standard was first drafted."Therefore I am proposing that we review the need for any further standards in 2014," he said. Proposed changes to the 2007 Vehicle Exhaust Emissions Rule will ensure that New Zealand continues to import new vehicles built to the highest available exhaust emissions standards, he said. "The new standards for new vehicles would mirror those recently agreed in Australia for the introduction of the European standards known as Euro 5 and Euro 6. These standards significantly reduce the harmful emissions from these vehicles," Brownlee said.A draft amendment rule will be made available for public consultation in June this year, and it is expected that the final amendment rule would come into effect before the end of the year. (April 17, 2012)

▪ Experts predict diesel deficit in India by 2016

Essar Oil, the second largest private refiner in India, predicts that the country will become a diesel fuel-deficit nation by 2016 because demand for diesel fuel will far outstrip supply."Diesel demand in the country is growing at an annual rate of 8%. At this rate India will need a brand new 9 million ton refinery every year, so in case demand continues to grow this rapidly, India will become diesel deficit by 2016," said, Naresh Nayyar, CEO of Essar Energy. "This will create a big opportunity for private refiners and we at Essar plan to utilize the opportunity by supplying diesel to oil PSUs," he added.

Government's pricing policy results in massive shifts in Indian auto industry
The demand for diesel fuel is growing rapidly because the government's pricing policy makes it cheaper than petrol and other industrial fuels. This has in turn triggered a massive shift in the automobile market, resulting in more sales of diesel cars compared to petrol cars. The company sells around 50-60% of its total output of 14 million tons per annum (mtpa) to oil public sector units (PSU) and the rest are exported. "Diesel forms the bulk of our sales to PSUs," said Nayyar. He explained that diesel fuel would remain in deficit despite the construction of new refineries, including Bharat Petroleum's 6 mtpa Bina refinery, and Hindustan Petroleum's 9 mtpa Bhatinda refinery. "In the near-term these new refineries could lead to a surplus in diesel production but in case the demand continues to surge then going ahead all the incremental production added by these new refineries could be absorbed and the nation could become diesel deficit by 2016." The automobile industry said figures show that the share of diesel in the overall passenger vehicle sales has already crossed the 50% mark for the first time last December. Petrol prices in India are about Rs65-70 (US$1.15-1.24) per liter, while diesel fuel prices remain at about at Rs43-45 (US$0.76-0.80) per liter. Diesel now accounts for as much as 80% of the market for vehicles that have both petrol and diesel variants. While demand for diesel vehicles surged 35% from April 2011 to February 12, there has been a decline of 15% in the sales of petrol cars and other vehicles during the same period. The Petroleum Planning and Analysis Cell (PPAC) said that in the overall growth in fuel consumption in the country between April 2011 and January 2012, diesel fuel accounted for 68%. (April 5, 2012)

▪ Bahrain finalizes plans for US$8 billion refinery modernization project

When it comes to refining capacity, Bahrain is looking beyond 2012. Bahrain's Minister of Energy, Dr. Abdul Hussain bin Ali Mirza, said that the government has decided to further upgrade its refinery. Over the years, the refinery had been upgraded – in 2007 a hydrocracker was added and in 2010, lube base oil plants were built. Now, Bahrain is set to implement its Refinery Master Plan Project, an US$8 billion modernization plant which, when completed, will enable the country to produce quality products that will satisfy the market, meet environmental standards, as well as world-class energy efficiency standards. "The refinery expansion will give us a competitive advantage and better position us to capture the opportunities that future market environments may offer," the minister said. (May 21, 2012)

▪ China's oil demand drops to six-month low

China posted its first yearly decline in three years as its implied oil demand in April hit a six-month low. The country's staggering economy, coupled with high crude prices was blamed for the slowdown. Official data released by Beijing also showed that the industrial output data of the world's second-largest oil consumer was lower than expected. China's implied oil demand in April was 9.31 million barrels per day (bpd), a 0.5% drop from a year earlier and the lowest since October 2011. The International Energy Agency (IEA), in its most recent report, said it expects China's oil demand to reach 390,000 bpd this year, a 4.1% increase. If the IEA's forecast proves true, the country would still account for almost half of the year's global incremental demand. Some analysts have said that the slowdown in oil demand in China is consistent with the slowdown in its economy. (May 22, 2012)

▪ Study finds E15 could harm millions of vehicles

The Coordinating Research Council, a non-profit organization that is based in the U.S. and is supported by the petroleum and automotive equipment industries, revealed that according to a recent study it had conducted, using gasoline mixed with 15% ethanol (E15) is potentially harmful to millions of vehicle engines of many cars and light trucks. In April this year, the U.S. Environmental Protection Agency (EPA) announced the approval of the first application for the use of gasoline containing up to 15% ethanol. EPA's decision allowed the use of E15 motor gasoline for 2001 and new models of passenger cars and light trucks. The announcement was met with expressions of concern from refiners, automakers and fuel retailers who argued that E15's higher percentage of moisture-attracting alcohol could result in corrosion in automobile engines, fuel dispensing equipment and storage tanks. Following the release of the results of CRC's study, the American Fuel & Petrochemical Manufacturers asked the EPA to rethink is decision. The final CRC report was presented by officials of the American Petroleum Institute, Global Automakers, and the Alliance of Automobile Manufacturers. (May 12, 2012)

▪ Indonesian government to give incentives for hybrid and electric cars

Indonesian President Susilo Bambang Yudhoyono announced that his government will grant fiscal incentives for hybrid and electric vehicles. The incentives are intended to help reduce fossil fuel consumption in the country. "By providing incentives, we hope that hybrid and electric vehicle prices can be more competitive and affordable," the president said. He further underscored the importance of promoting a transportation system that is not so dependent on fossil fuels, because the country's budget has been burdened by fuel and electricity subsidies. Tax exemptions will be given to green cars in 2013. (May 29, 2012)

▪ Tougher Chinese market challenges carmakers

In spite of forecasts by industry executives and analysts that China's car market growth could fall to an average of 7-8% during this decade, carmakers continue to descend upon China. As a result, there are more brands and products in the country, creating market conditions that are highly competitive and extremely challenging. Top officials of global leaders in the car manufacturing industry come to China mainly because it is the No. 1 car market in the world. But last year, the country registered single-digit growth rates and the prospect for another year of single-digit growth rates looms, in what could be the slowest back-to-back years since the market first took off in the late 1990s. Still, there seems to be plenty of growth left, and this is what keeps them coming: Even the more conservative forecasts sees the country's auto market growing to an impressive 30 million vehicles a year by 2020, a surge from last year's 18 million units. Survival, according to industry leaders, would depend on how well one understands the increasingly sophisticated Chinese consumers. (April 20,2012)

▪ PetroSA and Sinopec to build refinery in Coega, Africa

South Africa's national oil company, PetroSA, has teamed up with China Petroleum and Chemical Corporation (Sinopec), to build a refinery that will have the capacity to process several hundreds of thousands of barrels of oil per day. The refinery will be built in the Coega Industrial Development Zone in Port Elizabeth. PetroSA said that a study is underway to determine the actual capacity and cost of the refinery construction, which has been called Project Mthombo. The two companies have scheduled commissioning of the Coega refinery sometime between 2018 and 2020. Much of the foreign investments of China's resource companies are focused on Africa. In 2011 alone, merger and acquisition activities from China reached a total of US$5 billion, making China the biggest trading partner of Africa. (May 21, 2012)

▪ Bangkok opens first "green" oil outlet

Thailand's Bangchak Petroleum Public Co. Ltd. has opened its first Green Petrol Station. Thai Energy Minister Arak Chonthanon opened the capital's first Green Petrol Station on the inbound side of Vibhavadi Rangsit Road. Bangchak President Anusorn Sangnimnuan noted that Bangchak's first Green Petrol Station provides all kinds of renewable energy; while solr cells are also installed to supply power for the petrol station, its convenient store and other shops in the compound. Anusorn said that there are also a model plantation of oil algae and a garden of renewable energy at the Green Petrol Station. According to the Bangchak President, the Provincial Electricity Authority (PEA) has suggested that Bangchak increase its solar power generation by 50 megawatts in Prachin Buri, Kamphaeng Phet, Chaiyaphum and Lop Buri provinces, with its power generation set to start by 2014. (April 25, 2012)

▪ China postpones new diesel emission standards to 2013

China has once again postponed plans for the nationwide introduction of the China IV Standard for diesel emissions, which was issued in 2005 and was scheduled for implementation on January 1, 2011 but was postponed to January this year. The policy is similar to the Euro IV Standards and would have mandated truck manufacturers to install cleaner engines. Although it is an essential aspect in Beijing's efforts to reduce smog, the government has once again postponed its implementation to July 2013 primarily because for the policy to be effective, petrol stations will be required to sell higher-grade fuel which has lower levels of sulfur. Studies indicate that vehicle exhaust pipes in China contribute more than 70% of nitrogen oxides in Beijing which produces roadside PM2.5 levels, considered to be the biggest threat to health. The environment ministry has found it difficult to impose additional costs on the country's biggest petrol companies because these firms have considerable political and lobbying resources. Although the oil firms have the technical capability to improve fuel quality, they are reluctant to bear the costs. "The irresponsible failure of the oil industry to respond to the serious environmental problems by providing the necessary low sulfur fuels is seriously hampering further progress especially with diesel trucks and buses, jeopardizing public health and undercutting the government's efforts to substantially reduce nitrogen oxide emissions as called for in the 12th five-year plan," said Michael Walsh, chairman of the International Council on Clean Transportation. (February 2, 2012)

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