The Ministry of National Infrastructures has run into an unforeseen obstacle to its plan to allow limited production of leaded 96 octane fuel. Sources inform ''Globes'' that Oil Refineries Ltd. (TASE:ORL) is threatening to halt production of 96 octane completely, citing lack of financial viability. Oil Refineries recently informed the Ministry of National Infrastructures Fuel Administration, that it would begin making losses if limited production of 96 octane was continued, and that it was therefore mulling a total shutdown of production.
A year ago, the Ministry of National Infrastructures decided, by arrangement with the fuel companies, to end the use of octane 96, which is believed to cause more pollution than octane 95. Under the agreement, older vehicles would use octane 95 whose price would be raised by NIS 0.10 per liter. The sides agreed, however, to retain limited production of octane 96 petrol for 7,000 vehicles produced in the 1980s, which cannot use unleaded fuel. The petrol was to have been marketed at a select group of 10-20 gas stations across the country.
Senior sources at the fuel companies criticized the decision not to terminate all use of octane 96. According to them, the Oil Refineries' claim was justified, since it was not worth it for them to maintain a large production line for so small a quantity of fuel. The sources added that owners of older vehicles could switch to 98 octane, which is available at all fuel stations. "Octane 98 may be dearer, but you have to consider the fact that octane 96 pollutes the environment. It is no longer in use anywhere in Europe and it's time we fell in line with countries there," they added.
Published by Globes [online], Israel business news - www.globes.co.il - on October 14, 2007
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