Bioethanol unlocks potential for lower fuel prices in Ukraine

The introduction of mandatory bioethanol blending in gasoline from July 1 is not expected to lead to a significant increase in fuel prices. This assessment was given by fuel market representatives and experts.

According to analyst Oleksandr Sirenko from the consulting company NaftoRynok, the E10 gasoline blend (containing 10% bioethanol) purchased by Ukrainian traders has increased in price by around $20–30 per tonne this year. However, on a per-litre basis, this is negligible and is not expected to materially affect retail fuel prices.

OKKO GROUP also notes that in Europe, the bioethanol component is currently only $10–20 per tonne more expensive than petroleum-based components. Given that bioethanol makes up just 7–10% of gasoline, its impact on the final fuel price is minimal.

An additional factor is the decline in global oil and petroleum product prices following the easing of tensions in the Middle East, meaning there are currently no strong drivers for gasoline price increases from July 1.

In the long term, gasoline prices could even decline thanks to the development of bioethanol production in Ukraine. OKKO GROUP notes that the country is capable of fully meeting its bioethanol demand through domestic production, reducing import dependence and potentially lowering fuel costs.

Serhiy Kuyun, director of the A-95 consulting group, also believes that market operators are unlikely to revise prices due to the new requirements. He estimates that bioethanol blending will increase gasoline production costs by only 50–75 kopecks per litre, which is barely noticeable given current retail prices.

In addition, expanding bioethanol production in Ukraine could reduce gasoline imports, increase production of higher bioethanol-content fuels, and create additional demand for agricultural raw materials.

Tags: Ukraine, ethanol, biofuel, fuel