Singapore (Platts)--1Oct2007

Malaysia will delay plans to switch to cleaner gasoline and diesel for
motor vehicles in the fourth quarter to an unknown future date, industry
sources said Monday. 
     "They have postponed the date on directions from the finance ministry
and there is no indication on timing at the moment," a motor fuel supplier
said. "We are supplying according to the old specification for now."
     Industry sources had told Platts earlier that the deadline for
implementation of the new specifications was October 1.
     One reason for Malaysia to defer the implementation was the cost of the
cleaner fuels.
     Fuel subsidies in the country varies from month to month depending on
the cost of gasoline and diesel, a government official said. 
     In September, the government offered a subsidy of around MR 0.20/liter
for 97 RON and 92 RON while for diesel it was around MR 0.60/liter.
     According to Platts data, FOB Singapore gasoline prices for 92 RON
averaged $81.35/barrel in September, while FOB Singapore gasoil 0.5% sulfur
averaged $90.72/b.  
     Meanwhile, the Malaysian government has assured oil companies with retail
stations that they would be given ample time to prepare for the changes.
     "We will be given sufficient notice when to impose the new changes," one
source said. "At the moment, we are not importing [cleaner motor fuels]."    
      Importers need a lead time to take delivery of the cleaner fuels, while
retail stations would have to flush out their systems and blend down existing
stocks. 
     
     HIGHER EMISSION STANDARDS   
     The country's future gasoline consumption will see it meet Euro
II-compliant standards, which includes a cut in sulfur content to 500 ppm from
1,000 ppm. Sulfur in diesel will also be reduced to 500 ppm from 3,000 ppm.   
     Additional changes to gasoline specifications include adding an official
limit of 5% by volume for benzene and lowering the Reid Vapor Pressure to a
maximum of 65 kilo pascals from 70 kPa.
     For diesel, additional changes include raising the minimum cetane index
to 49 from 47, the cetane number to a minimum 49 from 45, revising the maximum
distillation at 370 degrees Celsius to 90% recovered rather than 95% recovered
and adding a new requirement of lubricity at maximum 460 microns.
     In September, Malaysia imported 303,762 mt of gasoline from Singapore,
while diesel imports stood 156,842 mt, based on weekly trade figures released
by government agency International Enterprises Singapore.
--Jonathan Nonis, Jonathan_nonis@platts.com