Argentina Moving Toward Ulsd Standard, Biodiesel

Diesel Fuel News, Nov 26, 2001 by Jack Peckham

Argentina's Secretary of Energy & Mines declares that diesel sulfur limits must be cut to 50 parts per million by 2006, but talks between refiners and the government might yet lead to further revisions, our sources say.

The ruling also cuts diesel sulfur limits to 1,500 ppm on Jan. 1, 2002, in Buenos Aires, Cordoba and Mendoza. This 1,500 ppm limit will expand nationally in 2004, followed by a 50 ppm diesel sulfur limit in 2006.

Making ultra-low-sulfur diesel (ULSD) will be very costly, as Instituto Argentino del Petroleo & Gas (IAPG) points out.

"Right now a stage of conversations between refiners and government authorities has begun, and it's possible that this might lead to a further revision of the specifications or the deadlines," IAPG told Diesel Fuel News.

Meantime, Argentina's government announced expansion of incentives for biodiesel, in order to aid farmers.

Under a Energy Secretary decree announced this month, biodiesel (either neat or 20% blend) will be exempt from the country's 15 cents/liter diesel tax for 10 years, and biodiesel producers also can qualify for conditional income tax and property tax breaks.

It's possible that the extent of the tax breaks could allow production of biodiesel at sales prices well below that of regular diesel, according to a local sunflower producer cooperative that's planning to construct a plant.

While farmers hailed the tax breaks, refiners didn't. "Aside from whatever political, social or environmental reasons claimed, the tax exemptions are not good for the refiners," IAPG told us. "They only generate competition from subsidized production, and provoke serious distortion in demand for the products produced at refineries, with consequent higher costs and higher investments."