01/11/2012 (Platts) - Thailand is set to step up its biodiesel program by raising the compulsory blending ratio of palm methyl ester, or PME, in gasoil to 5% effective November 1.

Refiners have been notified by authorities to boost the PME content from the current 4% as the shortage of crude palm oil supplies, which has delayed the kingdom's B5 mandate, has been resolved, energy ministry officials said last week.

Thailand was supposed to introduce the 5% blending mandate earlier this year, but a seasonal shortfall in local crude palm oil production resulted in the shortage of edible palm oil, prompting authorities to delay the rollout.

According to the Thai Biodiesel Production Association, the move to a 5% blending mandate is expected to raise local PME demand from the transport sector to 2.4 million-2.5 million liters/day, from slightly over 2 million l/d now.

Ministry officials said that the introduction of B5 should help draw down the country's PME surplus supply to an optimum stock level of 200,000 mt.

There are 12 PME production plants with an installed capacity of 5 million l/d in operation, according to the TBPA.

The Department of Alternative Energy Development and Efficiency has estimated that Thailand's consumption of PME as a gasoil blender would average 2.8 million l/d in 2012 compared with 1.8 million-1.9 million l/d last year.

Thai state energy agencies, meanwhile, are experimenting with the use of gasoil blended with 10% and 20% PME with a view to make them compulsory some time in the future.

The kingdom's 2011-2021 renewal and alternative energy master plan calls for the daily utilization of PME in transport sector of 5.97 million liters.

Thailand officially rolled out its biodiesel program with B2 being made mandatory in February 2008, moving to B3 in July 2010 and B4 a year later.

Figures from the Department of Energy Business showed that the kingdom's gasoil consumption in the first eight months of this year rose 7.2% year on year to 356,033 b/d.

Consumption last year was 330,719 b/d, 3.85% higher than a year ago and represented 45.42% of all petroleum products sold in 2011 which were at 727,998 b/d.