CLEAN FUEL INITIATIVES IN ASEAN (AN UPDATE)

1. CLEAN FUEL INITIATIVES IN ASEAN (AN UPDATE) 14th ASCOPE P&R BDC MEETING (DRAFT)

2. SUMMARY • Most of ASEAN countries is implementing the Clean Fuels program in various phases, albeit at a slower pace over the coming decade since it involve high investment cost to upgrade existing refineries. • Most of the countries follows the European Standards but each country implemented varying specification limit. • Thailand is ahead in the above program followed by other countries like Philippines, Malaysia, Singapore, Indonesia and Vietnam. Other countries Brunei and Myanmar has yet to announce their future clean fuels program.

3. SUMMARY • Most of ASEAN countries has announce their proposal to implement the Euro IV specs by 2010. However, without any major investment on refinery upgrading, most of these countries are unable to meet the stringent Euro IV specs.

4. BRUNEI • Since 2001, Diesel S specs was reduced to 1000 ppm with 47 cetane index. • Since 2001, Mogas is fully unleaded (ULG 92 and ULG 85) with specs of 1000 ppm S and 5% vol. benzene. • Existing refinery will not be able to meet the Euro standards. • No reported plan to move to the Euro Mogas and Diesel standards.

5. MYANMAR • Current diesel specs of 2000 ppm S. • Mogas still fully leaded at 0.15 gm/l. • Existing refinery will not be able to meet the Euro standards. • No reported plan to move to the Euro Mogas and Diesel specs.

6. CAMBODIA • Both leaded and unleaded Mogas are marketed since most of the products are imported. • Leaded Mogas (RON of 87 and 95) with 0.15 gm/l lead and 1500 ppm S content. Unleaded Mogas (RON of 92 and 97) with 1000 ppm S content. • Similarly for Diesel a mixture 2500 and 5000 ppm S are marketed. • No reported plan to move to Euro Mogas and Diesel standards.

7. INDONESIA • Unleaded mogas (ULG 88, 91 and 95) introduced in greater Jakarta & Cerebon area in July 2001 and Bali in January 2003. Current ratio of unleaded to leaded mogas is 40 to 60. With the implementation of the Blue Sky Project leaded mogas is project to be phased out and S lowered from 2000 to 1000 ppm by 2006. • The planned upgrading of the Balogan refinery with new cat. reformer and isomer unit and Cilacap refinery with a new isomer unit, Pertamina will be able to lower benzene from 5% to 3% in Java and Bali region and surrounding areas by 2008 as part of the Blue Sky Project thus able to meet the Euro III specs.

8. INDONESIA • Current diesel specs still maintained at 5000 ppm S and cetane nos 45. • By 2006 all Pertamina refinery is expected to produce Euro III specs of 350 ppm S and T95 of 350 0C. • No investments plan has been announced to meet Euro IV standards for mogas and diesel.

9. MALAYSIA • Malaysia deferred the implementation of the Euro II Mogas specs to late 2006. The specs changes are S from 1000 to 500 ppm with a 5% benzene limit. However, S typical actual average is 100ppm. • All the refineries (Petronas, Shell and Exxon/Mobil) unable to meet the Euro IV specs of 50 ppm S and 1% benzene planned for 2010. However, no upgrading investments plan has been announced.

10. MALAYSIA • Similarly the implementation for the Diesel Euro II was deferred to late 2006. The specs changes are lowering of S from 3000 to 500 ppm, increase cetane nos. from 45 to 49 and T95 distillation at 370 0C. • Malaysia will planned to introduce Euro IV specs by 2010 with the proposed specs limits of 51 cetane nos, 50 ppm S and T95 distillation at 340 0C . • All the refineries (Petronas, Shell and Exxon/Mobil) unable to meet the Euro IV standards. However, no upgrading investments plan has been announced.

11. PHILIPPINES • Implement the Clean Air Act (CAA) since 1999 with introduction of fully Unleaded Mogas. • Since early 2006 only ULG 93 and ULG 95 Mogas in the market with 500 ppm S limit, 0.005 gm/l lead, 2 vol % benzene and 35% aromatics. No near term plan to move to Euro IV. • Petron will be able to meet the Euro IV specs of 1% benzene, 50 ppm S, 35% aromatics and 10% olefins with upgrading investment of the LN isomerisation unit and hydrotreaters. However, Shell will not be able to meet the Euro IV specs.

12. PHILIPPINES • Current diesel specs limit at 500 ppm S since Jan 2004. Other specs are T90 distillation at 370 0C and cetane nos 48. • Petron able to meet the Euro IV specs of 50 ppm S and 15% aromatics with upgrading investment of gasoil hydro-treaters and a new hydro-cracker. Plan to further lower the S to 10 ppm by 2011.

13. SINGAPORE • Current Unleaded Mogas specs limit at 500 ppm S and 5 vol % benzene since 2001. No near term plan to move to Euro III or IV. However, the Government is expected to legislate to 1% benzene in near future. • All refineries (SRC, Exxon Mobil and Shell) unable to meet Euro IV specs of 1% benzene, 50 ppm S, 35% aromatics and 10% olefins. • Current diesel S limits lowered to 50 ppm since early 2006 to meet Euro IV specs.

14. THAILAND • Current Unleaded Mogas of ULG 91 and 95. Since 2004 specs limit at 500 ppm S, 3.5 vol % benzene and 35 vol % aromatics. • Plan to further lower S from 500 to 150 ppm in 2006 to meet Euro III specs. • Proposed to proceed to Euro IV specs by 2010. Most of the refineries will not be able to meet the Euro IV specs of 1% benzene, 50ppm S and 10% olefins.

15. THAILAND • Current diesel specs limit at 350 ppm S since January 2004 (Euro III). Plan to lower S further to 150 ppm by 2008. • Proposed to proceed to Euro IV specs by 2010. Most of the refineries will not be able to meet the Euro IV specs of 50 ppm S and PNA of 11%.

16. VIETNAM • Fully unleaded Mogas since 2000 with three grades RON 90, 92 and 95. Current limit of 1500 ppm S and 5% benzene. • Proposed to lower the specs by mid 2006 with 500 ppm S, 2.5 % benzene and max 10% Aromatics. • Current diesel specs a mix of 500, 2500 and 5000 ppm S. • Proposed to lower the specs by mid 2006 with 500 and 2500 ppm S specs. • With the commissioning of both the new refineries, Vietnam will be able to meet Euro III and IV specs respectively.