MOL announced an invitation to bid for the purchase of biodiesel component

MOL acts as a pacesetter: actions taken include the announcement of an invitation to bid for the supply of biodiesel component or its feedstock, straight vegetable oil. To discuss the relevant issues and possible answers, MOL organised not a conventional press conference, but an interactive press forum.

It is not a newfangled idea that oil reserves of our planet are rather limited. At this stage there is reason to worry about, but it makes good sense to think it over how we can substitute diminishing resources of mineral origin. In this process, MOL acts as a pacesetter: actions taken include the announcement of an invitation to bid for the supply of biodiesel component or its feedstock, straight vegetable oil.  To discuss the relevant issues and possible answers, MOL organised not a conventional press conference, but an interactive press forum.

The new diesel engine of Rudolf Diesel exhibited at the Y1900 World Fair ran on vegetable oil, however, later on, this diesel engine fuel was replaced by gasoil produced from crude oil of increasingly abundant reserves. 5-10 years ago, primarily it was Brazil to launch programs focused on the replacement of gasoline - they used their domestic sugarcane production to produce bio-alcohol as a motor fuel of agricultural origin. However, in recent years EU developed its own biofuel directive that sets the expected ratio of bio components to be blended into conventional motor fuels. In this area, the United States made more significant progress and it clearly shows that the spread of biofuels is a global process.

Running out and difficult to access

We all know that oil is a mineral resource of diminishing reserves that will potentially dry up in the next 25-30 years. Namely, based on the estimates made in 1980 based on the oil volumes consumed up to that date, reserves were expected to run out in 1991; but according to the latest technology, we are aware of additional volumes that equal to what was known to be available 25 years ago. In spite of the increasing number of exploratory wells, this reserve increase gradually flattens and only reserves of limited accessibility and minor reserves will remain.

It will really be difficult to access these resources, as the reserves of stable market economies are running out, while other countries exposed to armed conflicts and terrorist attacks may increase their oil production volumes by as much as 85% by Y2015. Oil supply is exposed to increased risks, including the nuclear power debate between Western countries and Iran.

Required by transportation only

The two oil price booms substantially realigned the oil consumption patterns. While the world consumption decreases due to reasons like the transformation of plants to use gas instead of oil-powered solutions, transportation uses the same or even increased fuel volumes. Road and air transport covers 70% of the total oil consumption. And within this segments, the ratio of motor oil consumption is 93 %. It plays a significant role in the heavy increase of carbon-dioxide emission; Asia and North-America increase their annual pollution level by the total emission volume of Central-Eastern Europe. There is no doubt that the oil consumption of transportation must first be reduced, as other sectors of the economy consume limited volumes only.

Various alternative sources of energy experience favourable development: safe power plants and windmill farms are built, and by using advanced technologies, even coal became a more environment-friendly source of energy. However, these are about generating electric energy that could not be effectively carried by vehicles. Gasoline-electric hybrid cars cannot fully eliminate this problem and are rather expensive.

Producing motor fuel from rapeseed oil

Biofuel is a promising solution that could substantially reduce the present level of carbon-dioxide emission. Processing of annually reproduced agricultural materials qualified as renewable sources of energy may bring favourable results. By pressing, biodiesel with characteristics similar to that of gasoil can be produced from sugarcane, corn, sunflower-seed oil, palm oil or the locally more widespread rapeseed oil. It is important to note that in addition to the useful biodiesel component content of rapeseed oil that represents more than 33 %, two thirds of this oil type is middling-forage and some glycerine that can and should be used.

On the basis of the relevant EU directive, from January 2008, a lower excise duty is payable after gasoil products with a sulphur content of 10 ppm, if their bio component content reaches 4.4 %. MOL believes it is essential to offer motor fuels with bio components, and for this reason, started producing an octane enhancer component of bio-ethanol content for its motor fuels in June 2005 - 70 % of which already qualifies as bio component. On January 19, MOL announced an invitation to bid for the supply of 150-200 kt/year of biodiesel component for biodiesel produced by petrochemical technology or straight vegetable oil that is the feedstock of the same.

What is possible vs. impossible?

As part of the tendering procedure, a press forum was held and chaired by Sándor Kántor, Strategy and Business Communication Director, where Artúr Thernesz, Development Director and László Varró, Chief Economist answered the questions raised by journalists. During this dialogue, it was discussed that due to precipitation, it is not possible to blend ethanol with gasoline and due to gum-formation, used cooking oil is not suitable for diesel engines. It was also stated that MOL expects intense competition during the tender, as areas associated with biofuel production already experience rapid growth.