From Hellenic Shipping News, July 24:
A potential recovery of Brazil’s crude exports could soon offer
newfound hope for tanker owners. In its latest weekly report, shipbroker
Gibson said that “for some time now, Brazil has been a major source of
demand for the tanker markets, both from a crude export perspective and
as an outlet for refined products (notably from the US). It’s fair to
say that Latin America’s largest economy has had a pretty tough ride in
recent years, having to contend with the oil price collapse and ‘car
wash’ scandal. Things are, however, now looking better. Upstream, the
nation has a continuous pipeline of new offshore oil projects scheduled
to come online, whilst downstream, Petrobras is edging closer to
achieving the foreign investment necessary to finish its stalled
refining projects”.
According to the London-based shipbroker, “both upstream and
downstream developments will have far reaching implications for the
tanker sector. On the crude side, the main positive demand driver is
that the growth in crude production is projected to accelerate, at least
in the short term. However, so far in 2018, production growth has
failed to meet expectations. Accelerating declines in mature fields have
seen production in the Campos basin fall to a 17 year low according to a
recent Reuters report. These declines have, to a certain extent, masked
output increases from new projects, primarily in the Santos basin.
Overall, slower production growth, field maintenance and mature field
declines have seen crude exports running 300-350,000 b/d below 2017
levels over the first six months of year. Nevertheless, new project
start-ups are expected to offset declines from mature fields in the
coming years, with higher growth expected over the second half of 2018
and beyond. Recent IEA data suggests that Brazilian crude production
will grow by nearly 900,000 b/d between 2018-2023. On the face of it,
positive for crude exports from the country”.
Gibson said that “in recent months, utilisation of existing refining
capacity also appears to be on the up. These higher refining runs have
restricted crude exports, whilst at the same time negatively impacting
product trades. Petrobras reported refined products output of 1.679
million b/d in Q1 2018, the lowest level since at least 2007. However,
unofficial data suggests runs may have risen by 200,000 b/d since then,
assuming a utilisation rate of 85%. Higher oil prices have forced the
government to introduce fuel subsidies, making it more difficult for
traders to import refined products, such as gasoline and diesel, into
the country. This has of course negatively impacted the product tanker
market, most notably those vessels loading in the US Gulf. The lack of
export demand has been accentuated by similar developments in Mexico.
Despite this,future downstream capacity additions in Brazil remain
uncertain. Most newrefining projects in Brazil have failed to
materialise. Petrobras has halted work at its 150,000 b/d Comperj plant,
whilst the 130,000 b/d expansion at Abreu e Lima has also stalled. The
company has been courting investors to assist in the commissioning of
these plants, but even so, it is likely to be a number of years before
any major capacity additions come online in the country”....
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