Singapore (Platts)--16May2008

Thailand's Bangchak Petroleum has begun construction of a 300,000
liter/day biodiesel plant in Bang Pa-In in Ayutthaya province with first
production slated for mid-2009, a company official said Friday.

Bangchak Petroleum in March set up a joint venture biodiesel production
company called Bangchak Biofuel with Universal Absorbents & Chemicals Co to
build and operate the plant. Bangchak has a 70% stake in the JV and Universal
holds the remaining 30%.

The plant will use palm oil as feedstock and Bangchak Biofuel has already
signed take-or-pay contracts to buy palm oil from five manufacturers for eight
years to prevent a shortfall in feedstock supply, a company official had
earlier said.

Bangchak will lift 60% of the plant's biodiesel output for its own use
and has a contract with a foreign oil company operating in Thailand to sell
the remaining 40%, the official said.

Bangchak, which offers both 2% biodiesel blended-gasoil (B2) and B5 at
its petrol pumps, currently buys biodiesel on a spot basis from one of the
kingdom's eight producers. The eight producers have a combined capacity of 1.5
million l/d. Thailand mandated B2 sales in February this year, but B5 is
sold on a voluntary basis.

Once Bangchak's plant is up and running, the company will no longer need
to buy biodiesel on a spot basis, the official added.

Separately, the official said the company was not too concerned about the
poor state of biodiesel producers in the region with most of them forced to
shut their plants or operate at very low rates. "In my opinion, there is
enough demand in Thailand. The government supports the use of renewable energy
and the way oil prices are skyrocketing, consumers are using more renewable
energy such as biodiesel and gasohol (ethanol-blended gasoline)," the official
said.

According to data from the energy ministry, gasohol demand in the kingdom
surged 103% year on year to 8.05 million l/d in April while B5 demand went up
eightfold to 8.43 million l/d.

Bangchak operates a 120,000 b/d refinery in Bangkok. The company earlier
this week reported a net profit of Baht 853 million ($26.65 million) in the
first quarter of 2008 compared with a net loss of Baht 42 million in Q1 2007
led by inventory and foreign exchange gains and an improvement in gross
refining margins. The company's revenue went up 49.2% year on year to Baht
29.82 billion.
--Mriganka Jaipuriyar, mriganka@platts.com