Mystery British car breakdowns may lead to diesel price rise

Mon Mar 10, 2014 10:19am EDT

* Hundreds of cars broke down due to suspected diesel quality issues

* Incidents linked to biodiesel, Russian imports

By Ron Bousso

LONDON, March 10 (Reuters) - Britain is investigating a wave of mystery winter car breakdowns possibly linked to biodiesel or imports of diesel from Russia that clogged up filters and could now lead to supply disruptions and ultimately higher motor fuel prices.

Hundreds of diesel-fueled cars broke down late last year mainly in northeast England and Scotland as a result of gel-like substance blocking their engine filters and leading vehicle recovery services and the refining industry to suspect fuel quality issues related to cold weather.

The British Standard Institute launched an investigation and members of the UK Petroleum Industry Association (UKPIA) - BP , Essar, Esso, Shell, Phillipps 66 , Total and Valero - began screening diesel for "filter blocking tendency" (FBT).

UKPIA said in an internal memo last week it was examining all possibilities "including quality of biodiesel (FAME), base hydrocarbon fuel, how the product is blended and any other additives used."

The FBT tests will remain in place until April 15, after which the results will be assessed, it said.

Ultra low sulphur diesel, or ULSD, in Britain is required to meet the European Union standard, known as EN590, which has anti-freezing agents added to it in winter.

While the origin and exact cause of the breakdowns remain a mystery, biodiesel has been singled out as a possible culprit.

"One of the areas receiving closest scrutiny is the up to 7 percent biofuel content which by EU law has to be added to all road diesel," British car breakdown recovery service RAC said in a statement in December.

Another possible source for the incidents is Russian diesel after tests on some cargoes of diesel originating from the Russian port of Primorsk in the Baltic Sea showed high FBT levels, according to several industry sources.

However, pinpointing the exact source of the irregular level is hard as fuels from different sources are blended at the port prior to being loaded onto tankers, they said. Others dismissed the idea, saying no similar issues had been reported in other European countries which rely heavily on Russian diesel.

Britain imports nearly half of the more than 10 million tonnes of diesel consumed last year, according to UKPIA data.

The country may face severe supply disruptions in the short term should the source of the problem be traced to Russian diesel, which accounted for around 40 percent of Britain's demand last year, according to trade sources.

Traders fear any change to the British diesel standard could also lead to price increases.

"A change in the diesel specification would require all suppliers into the European market to meet the same levels of FBT," potentially adding to fuel costs, an industry source said.

Adding FBT tests to the British diesel standard could potentially increase wholesale fuel costs by up to $5 a tonne, or around half a percent, according to two industry sources.

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