Chile drafts E10 ethanol blending plan to cut fuel costs amid oil spike
Chile is considering a 10% ethanol blend in gasoline to reduce fuel supply costs by roughly $107 million a year, according to an internal ministry memo.
Chile's energy ministry has drafted a proposal to introduce E10 ethanol blending, mixing 10% ethanol with gasoline, as a way to lower government fuel supply costs by an estimated $107 million annually, according to an internal memo prepared by ministry officials.
The move comes as Chile, one of Latin America's largest oil importers, faces pressure from elevated crude prices. OPEC data showed the country imported 181,000 barrels per day of crude oil in 2025. Brent crude traded above $105 a barrel on Wednesday, up from about $73 before the U.S.-Israeli war on Iran began.
Ethanol-gasoline blends are common across Latin America. Brazil's $20 billion ethanol industry is the second largest after the United States, and its flex-fuel vehicle fleet runs on blends now exceeding 30% ethanol. Chile, by contrast, has no ethanol-blending mandate and remains one of the few countries in the region still relying on MTBE, an octane-boosting gasoline additive.
The government has previously held off on ethanol blends because Chile lacks significant domestic production and sufficient land to grow enough crops for a domestic industry, according to a U.S. Grains Council briefing. Without the ethanol option, Chile remains exposed to global price swings. In March, as U.S. and Israeli attacks on Iran intensified, the government stopped fully cushioning pump prices due to oil price volatility, straining its MEPCO fuel stabilization mechanism.
Finance Minister Jorge Quiroz said in March that "the government is out of money." A shift to E10 would help phase out MTBE and ease pressure on President Jose Antonio Kast's administration following oil supply disruptions that have stoked public discontent.
According to the grains council briefing, the switch would be relatively simple and affordable. State oil company ENAP would need to invest about $10.8 million to adapt refining, terminal and storage infrastructure, the ministry memo said. The transition could be introduced gradually and partly offset by lower carbon-tax payments. The grains council said a 10% blend, and even a 15% blend, could be achieved by 2030.
In May, the ministry released a roadmap to diversify fuel sources and lower carbon emissions by 2030, including through fuel blends. The ministry did not respond to requests for comment on the memo, including on the timing of any transition and why Chile had not pursued it sooner.
Chile already depends on the United States for 85% of its gasoline supply, according to the grains council briefing. A switch to ethanol could benefit corn growers, the council said, since the grain is used to make the fuel. The ministry conceded in its memo that such a move "replaces one import dependency with another." Chile's ethanol imports currently come mostly from Argentina, followed by Bolivia, while production in neighboring Brazil has risen sharply under its government mandate to use more ethanol in gasoline.