KEY POINTS:
Oil industry minnow Gull has laid down the gauntlet to its large competitors by declaring itself just days away from meeting a proposed mandatory sales obligation for biofuels.
Although the fate of the Biofuels Bill in Parliament remains uncertain, especially its proposed enforcement date of July 1, Gull
expects by next week to have sold enough of its 10 per cent bioethanol-petrol blend to meet the first six-month instalment of the would-be mandate.
That claim was welcomed yesterday by Government energy efficiency officials keen to dispel suggestions by large oil companies that they will not be able to obtain enough biofuels from "sustainable" sources to meet a proposed requirement for biofuels to make up 3.4 per cent of their sales by 2012.
The legislation proposes that the obligation begin with 0.53 per cent of sales to be biofuel in the first six months to December.
"Gull is showing it can be done and we are confident enough sustainably produced biofuels can be obtained from New Zealand and overseas to meet the biofuels obligation," said Energy Efficiency and Conservation Authority spokeswoman Janice Rodenburg.
Gull general manager Dave Bodger said that if the law were already in effect, the company "would easily be compliant with its year one obligations".
Although he would not disclose sales volumes, he said Gull was introducing its 98-octane biofuel blend to its 26th service station this week, and pouring it into about 20,000 vehicles a month.
He said Gull did not "buy into" claims from other industry quarters "around sourcing sustainable biofuels and supposedly how hard and expensive it is.
"With great support from the public, it's relatively easy - our view is, just get on with the job and get it done."
Although BP raised the price of its 98-octane petrol to 207.9c a litre this week, Gull's blend was still being sold last night for 9c less. BP spokeswoman Diana Stretch said Gull's biofuel was blended from a cheaper 95-octane petrol source, at just a single oil terminal, at Mt Maunganui.
She denied that economies of scale favoured BP, as the company's New Zealand operation was at the end of a long supply chain, and it had far more infrastructure to duplicate before meeting its biofuel obligations. It stood by its prediction that higher biofuel recovery costs would push petrol and diesel prices up by about 7c a litre over 18 months, and was waiting for the Government to define sustainability.
Energy authority senior adviser Elizabeth Yeaman said the cheapest form of biofuel was from Brazilian sugarcane, which she believed was sustainable in being grown "well away" from any endangered rainforests and not in competition with food supplies.
She did not believe biofuels would push prices up by more than 1c a litre in New Zealand, and said Gull was buying feedstock of whey from Fonterra at internationally competitive levels.
Ms Stretch said there was only a limited supply of whey available domestically, and BP would have to use special chemical tankers to import biofuels from Brazil.