Analytics, Baltic States – CIS, Energy, EU – Baltic States, Transport

Thus, in 2009, consumption of gasoline in Europe decreased by 23.1 million tons (19.3% – see Table 1) as compared to the year 2003. Besides, consumption of diesel fuel in Europe is considerably increasing, having been 163 million tons in 2003 and increased up to 200.8 million tons (+18.8% of increment) in 2009. Thus, according to the annual report “Jahresbericht. Mineralöl-Zahlen2009” (Germany), consumption of diesel in EU countries constituted: 200.0 million tons in 2007, 203.2 million tons in 2008 and 200.8 million tons in 2009.

Table 1. Gasoline consumption by world countries (million tons per year)

Source:“Jahresbericht 2009. Mineralöl-Zahlen 2009”

Gasoline in EU countries is produced at 135 oil refining plants whose capacity is 852 million tons of oil per annum, which makes up approximately 20% of world oil refining (as of 01.01.2008). The content of European gasoline over the past years has included: catalytic cracking gasoline – 30%, catalytic reforming – 50%, products of conversion – 5%, products of isomerization – 8%, additives (ETBE, MTBE, TAME) *– 7%.   According to the data provided by the “LyondellBasell” company, European production of ethers in 2009 totaled: MTBE – 2.64 million tons, ETBE – 2.59 million tons, and TAME – 0.75 million tons. That is, European oil plants used over 6 million tons of oxygen-containing additives in gasoline production.  

Consumption of ethanol fuel in EU in 2009 constituted 4.278 billion liters (3.41 million tons), i.e. increased by 18.4% as compared 3.5 billion liters (2.78 million tons) in 2008. Production of ethanol fuel in EU countries totaled 3.701 billion liters (2.94 million tons) in 2009. Source: “European Bioethanol Fuel Association”      

Taking into consideration the fact that gasoline contains approximately 7% of oxygenating additives whose price is always higher than that of gasoline, it is very important to use the developed economic index of price ratio: additive – gasoline. Such ratio expressed as a factor coefficient reflects the correlation ** between its constituents which is of practical value.  

Such an index in North-Western Europe is called factor-coefficient which equals to the ratio of MTBE price divided by the price of gasoline 10 ppm (FOB NWE). The factor-coefficient by MTBE has fluctuated from 1.05 to 1.15 (see Table 2) over the past seven months, whereas in 2009 it made up 1.14 – 1.27. The mentioned coefficient is used by oil companies producing gasoline and by petrochemical companies producing MTBE; it is often used in analytic reports of European ratings Platt’s, as well as in global chemical production (www.icis.com).  

Currently, in Europe and worldwide it is not practiced to take into account the factor-coefficient between ETBE and 10 ppm gasoline. Nonetheless, such coefficient would be quite topical and it is of practical value as relevant ministers of 27 EU participant-countries in Brussels arrived at “political agreement” regarding European commission’s proposal to increase the percentage of renewable energy sources in the overall structure of energy consumption in EU, the so-called “20-20-20” plan.   EU Executive authority proposed that the members of this regional organization should increase the percentage of renewable energy sources up to 20% by 2020, to reduce by 20% the harmful exhausts into the atmosphere to reach the indicators of the year 1990 and reduce overall energy expenses by 20%. The mentioned plan for EU countries stands for gradual reduction in usage of MTBE and transition to ETBE.  

Calculations show that the factor-coefficient ETBE – gasoline 10 ppm proposed by the authors has fluctuated between 1.29 and 1.46 (see Table 2) over the past seven months of 2010, whereas in 2009 it made up 1.49 – 1.97.  

The factor-coefficient can change depending on the price of ethanol fuel which as of August 2010 amounted to: $570-616\mt in USA- Chicago spot, $770-783\mt in Brasilia, and $908-924\mt in Europe – NEW ARA T2.

Table 2. Price for gasoline 10 ppm, MTBE, ETBE at FOВ North-West Europe ($\mt )

Russia has just recently ratified gasoline and diesel fuel quality standards which are getting closer to European requirements. They are reflected in the technical regulations “On requirements to automobile and aviation gasoline, diesel and sea navigation fuel, jet engine fuel and furnace fuel oil”.

The purpose of adopting the regulations in the part regarding gasoline and diesel fuel was to get as close as possible to the requirements set in Europe by the directives of European Parliament and Council 2003/17/ЕS и 98/70/ЕS.

In 2008, the demand for MTBE in Russian domestic market constituted 430000 tons, while by 2010 it will supposedly increase by 7-8% to constitute 480 – 500 thousand tons per annum (Russian production in 2006 totaled 695000 tons).

According to our calculations, production of MTBE in Russia in 2009 totaled approximately 800000 tons, while consumption of Russian production gasoline was approximately 500000 tons. Export of MTBE in 2009 totaled 300000 tons of which 75000   tons falls to Ukraine’s share.

Taking into account the gasoline quality requirements proposed by the Russian Federation government in Russia, the authors hereby propose to introduce gasoline A-95 – MTBE into the factor-coefficient for the Russian market, because so far such a coefficient has not been used. The mentioned coefficient can be used in calculation of analytic companies, for forecasting gasoline and MTBE market development. Thus, over seven months of 2010, the MTBE factor-coefficient has fluctuated between 1.05 and 1.17 (see Table 3).

Table 3. Price for gasoline А-95, MTBE, methanol in Russia ($\mt).

Factor-coefficient МТВЕ – gasoline А-95  over 7 months of 2010.

Source:   www.nge.ru, www.himtrade.ru

The main importers of Russian МТВЕ in 2008 are Finland, Ukraine, Holland (see the table 4). At the same time, it’s not important that all the volume of MTBE supplied to these countries (in this case except Ukraine) is consummated there. In most cases the transit route passes through these countries to the end-user countries. On the whole through Russia – 46.1% of the common production of МТВЕ was exported (see the table 4)

Table 4. The structure and export volume of Russian МТВЕ in 2002-2008 years (tons).

Source: www.newchemistry.ru

Recently Ukrainian fuel market is essentially changed. This year must be the last for the old-timed fuel. Starting from the New Year – 2011 y. – Ukraine could start using more quality and ecologically clean gasoline and diesel fuel oil for vehicles. Euro 4 standard, which became obligatory in Europe in 2005 y., produces two times less of  pollutant emissions, especially  monoxide carbon (CO), than gasoline with euro 2 standard, which dominates in Ukraine. Furthermore starting from 2009 года the countries of EU already passed to a new stage – Euro5 standard and being prepared for Euro6. But it seems that passing from the current Euro2 standard to Euro4 could be postponed till 2013 year. As most part of Ukrainian fuel producers couldn’t make in time the preparation of the manufacture for this kind of passing and ask more time for modernization. 

Ukrainian oil-refining plants produced 3.257 million tons gasoline in 2009. In 2009 gasoline consumption made – 4.24 million tons, А-95 – 2.47 million tons, А-92 – 1.37 million tons and А 76\80 – 0.38 million tons. For the production of high-octane gasoline A-95 and A-92, Ukrainian producers in 2009 used approximately 200000 ton МТВЕ, from which the import from Russia made nearly 75000 ton.

Unfortunately, it’s impossible to make the proper analysis of coefficient of gasoline A-95 and MTBE for Ukraine. It’s correlated with this fact that there is no producers of MTBE additives in Ukraine, except oil-refining plant Lisichansk (100000 ton\year) and oil-refining plant Kremenchug (24000 ton\year), producing MTBE just only for their own needs of high-octane gasoline production. The market price of MTBE additives in Ukraine for the 1^st of August 2010 made $ 1070 – $ 1090 per ton, taking into account that the wholesale price for 1 ton gasoline A-95 made $ 1115. As we can see, petrol in Ukraine is more expensive than MTBE additives, taking into consideration that the coefficient factor is calculated on the conditions of FOB NWE ARA.

An important economic indicator in determining the cost of additives (ETBE, MTBE) to gasoline is the cost of raw materials (see Table 5).

ETBE is ethyl-tret-butyl ether, containing 50% of ethanol fuel;

MTBE is methyl-tret-butyl ether, containing 33% of methanol;

TAME is tret-amil-methyl ether, containing 10% methanol.

Taking into account the percentage of alcohol (ethanol, methanol) in ETBE and MTBE additives (price as of 20.08.2010), it can be calculated that the price of ethanol T1 in the price of ETBE at NWE ARA Т1 amounts to 38.7%, whereas the price of methanol T1 in the price of MTBE at NWE ARA Т1 amounts to 14.6%. Comparably, the respective figure as of January 15 of 2010 was as follows: in ETBE the cost of ethanol T1 – 45 %; while in NTBE the cost of methanol T1 – 16%. As to the cost of isobutylene in the cost of ETBE and MTBE additives, it depends on different factors and is more difficult to define.

Taking into account the aforesaid, it can be concluded that the cost of ethanol in the cost of ETBE in Rotterdam (T1) can amount to 35 – 48 %, while the cost of methanol in the price of MTBE in Rotterdam (T1) can amount to 13 – 18%. As to the Russian market, the cost of methanol in MTBE as of August 6, 2010 made up 9.3%.

Table 5. Fuel prices FOB NWE ARA ($\mt)

Source: “Jim Jordan&Associates”

We consider that ETBE, MTBE – gasoline factor-coefficients can be used when calculating gasoline prices, as automobile gasoline are one of the most qualified and expensive energy carriers. These coefficients can also be used in analytical reports of Platt’s, ICIS ratings which is very topical for the contemporary oil products market, particularly for the European.

As to the opinion of the authors, it’s very important to develop mathematic model of forming of coefficient ETBE factor – petrol and MTBE petrol taking into account first of all the cost of spirit, used for the production of the mentioned additives.

*ЕТВЕ – ethyl tertiary butyl ether, МТВЕ – methyl-tret-butyl-ether, ТАМЕ – Tret-amyl methyl ether (international symbol names);

** Correlation is the statistical interconnection of two or several random values (or values which can be considered so with a certain acceptable degree of accuracy). Meanwhile, changing of one of several of these values results in systematic changing of the other one or several values. Correlation coefficient is the mathematical measure of correlation of two random values.