The country’s largest oil refining and marketing company Petron Corporation is pursuing potential supply or off-take agreements with local ethanol producers and other prospective investors in the industry.

The firm said this is in line with its commitment to promote the use of indigenous bio-fuels. Petron hopes that this will further encourage more investments in the ethanol industry and boost local supply.

“We are taking the initiative to pursue off-take agreements with strategic partners so we can further increase ethanol supply from local sources,” Petron chairman Ramon S. Ang said.

He added that “this affirms our support for the local production of ethanol since it will drive capital investments in rural areas, create jobs and more importantly, lessen the country’s dependence on imported fuel.”

For 2010, Petron estimates that it will have to import about 60 percent of its ethanol requirements to meet the 5 percent ethanol-blend mandate set in the 2006 Biofuels Law.

With inadequate local supply, it is estimated that Petron will need to source more imported ethanol next year when oil companies are mandated to have a 10 percent blend in all gasoline products.

“The essence of the law is to encourage more investments in the local biofuels industry but so far  supply hasn’t caught up with demand,” Ang noted.

Thus, Ang said that, “by going into supply agreements with local producers, we aim to address this imbalance and give the country a more stable and reliable supply of locally-produced ethanol.”

Petron is the only oil company in the country with an existing supply agreement with a local ethanol producer – San Carlos Bioenergy Inc. (SCBI).

SCBI owns the country’s first integrated ethanol and cogeneration plant with a capacity to produce 125,000 liters of ethanol daily.

The company was also the first to purchase the first locally-produced fuel grade ethanol from Leyte Agri Corporation in August 2008.

Ethanol is a high-octane, water-free alcohol produced from sugar cane and other crops. It is used as a blending component at 5 percent to 10 percent concentration in gasoline.