Middle East Turns to Biofuels Amid Rocky Oil Prices and Environmental Awareness

Imran Khan (Lootah Biofuels/Renewable Energy World) ... Crude oil is refined to produce diesel and petrol and the cost of crude oil is the most crucial factor affecting fuel prices over time. However, with the shortage of refineries to refine the crude, the Middle East is in a situation where the gap between the prices of refined product and crude oil is huge.

Supply remains erratic. A number of other factors also increase the uncertainty of supply and with rising demand, this is creating tremendous pressure on pricing. Political ambiguity in oil producing regions has historically impacted on crude oil prices and the political situation in the Middle East is of global concern.

In the background of the surging crude oil prices in the Middle East, biofuels have emerged to be the most preferred fuel alternative in the region.

One of the factors that have limited green initiatives in the past is the perception of higher costs associated with renewable energy. This myth is being shattered through the concerted efforts of all stakeholders in the energy sector. As far as the economic viability of biofuels is concerned, there are proven examples of it being cleaner and cheaper than the conventional diesel. For example, biodiesel provided by Lootah Biofuels in UAE is 20 fils cheaper than the conventional diesel available at the ENOC, EPPCO and EMARAT fuel stations.

With more and more biofuel companies coming into the picture in the Middle East, there is an acute increase in the market share of biofuels.

A leading oil and gas company Petrixo is in the process to build its first waste to the Biogas facility in the project site that will utilize waste from the oil seeds to generate electricity for internal use. Once operational, the plant will generate revenue from the production of electricity and the sale of carbon credits generated under the UN clean development mechanism. Petrixo has announced their upcoming BioFuel Refinery in Fujairah, UAE, with capacity of one Million Metric Tons of Different types of biofuels and with investment in excess of US$800 million.

Increased domestic consumption of fuel has a spiral effect on the economy. For one, it increases oil bills, especially in the absence of adequate refinery capability to address local demand. Two, it causes losses to the Exchequer in terms of fuel subsidies. Finally, increased dependence on traditional fossil fuels for powering the economic wheel has a lasting detrimental impact on the environment.

The use of biofuel addresses all three of these concerns, as demonstrated by the Lootah Biofuels project. The potential for biodiesel, generated from used cooking oil, is tremendous in a city such as Dubai that is focusing on driving its hospitality and tourism sectors as part of economic diversification. READ MORE