Basic Energy, Shell sign deal on bioethanol supply

Basic Energy Corp. has  signed an agreement with Pilipinas Shell Petroleum Corp. for the possible supply of up to 50 million liters of bioethanol annually to the oil refiner.

Under the agreement, both Basic and Shell agreed to “undertake a joint study to determine the feasibility of entering into an off-take agreement for the supply of bioethanol.”

“If feasible, the result of the study would then determine the terms and conditions for a definite agreement for the supply of bioethanol by Basic  to Shell,“ Basic said in a disclosure to the Philippine Stock Exchange.

Basic Energy is eyeing to raise between P2.2 billion and P2.5 billion from a planned stock rights offering and additional share issue to fund its expansion into  biofuels and other alternative and renewable energy sources and in mineral resources industries.

To facilitate the issuance of shares, Basic Energy is raising its authorized capital from P500 million to P2.5 billion comprising of 10 billion shares with a par value of P 25 centavos per share.

Of the expected proceeds, P1.8 billion has been earmarked for the group’s ethanol projects while the balance will be used to fund its oil and gas and mining ventures.

Basic Energy was transformed into a holding company with bioethanol producer Zambo Norte Bioenergy Corp. (ZNBC) as one of its subsidiaries.

ZNBC was acquired by Basic Energy for P120 million worth of cash and shares in line with the group’s bid to take advantage of the expected strong demand for biodiesel as the country shifts to more indigenous fuels.