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Petrobras has consulted fuel distributors in search of tanks to temporarily store its gasoline production, at a time when it decided to expand the production of its refineries, both to guarantee the supply of gas for cooking and to produce navigation fuel.
The strategy indicates bottlenecks in the national capacity to store petroleum products amid the coronavirus pandemic, which reduced sales of automotive fuels in the country. According to the authorities, however, there are still no problems storing oil in Brazil.
Sales of cooking gas grew 12% in March after isolation measures began to contain contamination by the new coronavirus. The expectation of the sector is that the figures for April will be even higher, since they consider the entire month of isolation.
The scenario led Petrobras to intensify fuel imports, but there are also bottlenecks in the structure to bring the product to the country. Gasoline and cooking gas are produced in the same refining units, which means that the increase in production of one of them also expands that of the other.
The reduction in the level of use of refineries had been announced at the start of the pandemic, but was reversed last week. In addition to the demand for cooking gas, Petrobras has benefited from the increased demand on the international market for less polluting navigation fuel.
According to data from Secex (Ministry of Foreign Trade), fuel oil exports through Brazil have remained at high levels despite the crisis. In the daily average for April, until last week, there were 71.2 thousand tons, 47.6% more than in the same month of 2019.
The increase in sales occurred since the end of 2019, reached a record in February and remains during the pandemic in response to new restrictions on polluting emissions in shipping that began to take effect in January.
Low-sulfur, pre-salt oil produces cleaner ship fuel and is valued for this: In 2019, Petrobras even sold the barrel at a premium of $ 4 over the Brent price, an international benchmark traded in London.
Oil exports are also on the rise: In April, Petrobras hit a record high for oil sales abroad, at the 1 million barrels per day mark. At the start of the pandemic, the state company had set a ceiling for oil production of 2.07 million barrels, but also revised the decision.
“With the evolution of demand for our products proving to be better than expected, we opted for a gradual return to an average production level of 2.26 million barrels per day, accompanied by an increase in the utilization factor of refining capacity “the company said.
Its refineries, which reached nearly half capacity in the first half of April, are resuming operations to produce more fuel. On the 26th, according to the MME (Ministry of Mines and Energy), they were just over 60%.
The change in address led to an effort to avoid bottlenecks in the storage capacity of other derivatives. One of the strategies is to search for tanks from other companies to place products that come out of the refineries along with marine fuel.
On another front, the company accelerated the holding of discounted gasoline and diesel auctions to appeal to dealers who still have tanks available and want to take the opportunity to save cheaper products. Just last week, two offers were made.
There are no public data on the use of fuel storage capacity in the country, but the sector sees bottlenecks in the face of falling demand, a perception reinforced by the strategy that the state company has been implementing.
For experts, the situation may worsen if the government approves the increase in gasoline taxes to improve the competitiveness of ethanol. On some occasions this month, Petrobras has already warned about the impact of the measure, which is defended by the plant’s owners, on its operations.
According to the ANP (National Agency for Oil, Gas and Biofuels), refineries, terminals and distributors in the country can store up to 137 million barrels of fuel, which is equivalent to 77 days of production of oil products in 2019.
In note to SheetPetrobras confirms that it has consulted clients on the availability of tanks to temporarily store its products. The infrastructure for storing oil has “reasonable clearance,” says the company.
The lack of space to store oil in the United States led the price of WTI (West Texas Intermediate) oil, a benchmark in the US market, to operate in negative terrain for the first time in history on April 20.
The crisis put little Cushing, a city of 7,800 inhabitants in the US state of Oklahoma, which is one of the main oil storage centers in the United States, on international news.
On the Friday before the collapse of the WTI, 76% of the storage capacity in Cushing was occupied. By the following Friday, it was 81%. Fearing that they would not have a place to store oil, investors preferred to pay in order not to receive the barrels.
The problem is more pronounced in the United States, but there are bottlenecks in other countries. The sector has been turning to ships as an alternative to the tank, which has caused the oil companies’ shares to skyrocket.
Between 20 and this second (4), the market value of the North American oil tankers, for example, increased by 50.4%. Just the day of the WTI contract collapse, the company increased 19%. Other companies in the sector also fired that day, such as Scorpio Tankers, which experienced a 12% increase, and Tsakos Energy Navigation, with an 18% increase.
In Brazil, a large part of the production is stored in tanks on the platforms themselves; Due to difficulties in constructing pipelines connecting offshore wells to the coast, Petrobras is the world’s largest oil company that uses units known as platform ships.
According to the ANP, platform ships operating in Brazilian waters may contain 87 million barrels of oil. In the refinery terminals and tanks, there is room for another 76 million barrels. This infrastructure would guarantee 57 days of average production in 2019.
“Even with reduced demand for petroleum products, oil storage capacity remains very strong,” says ANP.
“Storage is not a problem for Brazil. Petrobras can reduce production if it cannot store. And, no matter how much you store and sell later, the high level of the shares causes the price to drop, which is not advantageous for Petrobras, ”says Luiz Carvalho, analyst at the Swiss bank UBS.
Also, since it is highly flammable, the cost of storing and transporting oil is high.
“Oil can contain gases that, in contact with oxygen, can explode. An adequate ventilation system or oxygen-free tanks are required. If there were space and the cost of storage was not so expensive, it would be worth buying it, “says Ricardo Cabral de Azevedo, professor of the Petroleum Engineering course at USP.
The publications send a letter to Bolsonaro against the tax increase
The entities representing the owners of service stations sent a letter to President Jair Bolsonaro against the proposal to increase gasoline taxes, which has been negotiated by ethanol producers.
On Friday (1), the federal deputy Arnaldo Jardim (Ciudadanía-SP), which is part of the Parliamentary Front for Agriculture, declared that the government has already made the decision to collect R $ 0.20 per liter for Cide (Contribution for the intervention in the economic domain), which today costs R $ 0.10, and imposes a tax on the import of gasoline. The Ministry of Economy had said that a decision had not been made.
“This increase would come at a completely inopportune moment for fuel reselling, which is also in crisis, with a sharp drop in sales,” say the owners of the messages in the letter, signed by Fecombustíveis (National Federation of Trade in Fuels). and lubricants). ) and 34 unions.
Service station owners suggest that instead of raising the gasoline tax, the government zeroes the PIS / Cofins tax rate on ethanol, which is also one of the claims of plant owners. Ethanol producers also apply for credit to finance stocks that are stagnant due to lack of demand.
