Fear of scarcity makes distributors increase diesel imports

RIO – To circumvent the risk of diesel shortages starting in August, the country’s main fuel distributors increased the number of import licenses for the product by more than ten times in recent months. There is a fear that, in the wake of the war between Russia and Ukraine, part of the European countries start using more diesel instead of Russian gas. Other factors taken into account are the beginning of the summer vacation in the Northern Hemisphere and the forecast of hurricanes on the US coast – which usually cause local production to stop. In Brazil, which depends up to 30% on imports, demand tends to grow with the flow of the agricultural harvest.

Survey made by Estadão/Broadcast shows that, in April, the National Agency of Petroleum, Natural Gas and Biofuels (ANP) issued 305 diesel import permits. A month later, the number of authorizations jumped to 433 – 12 times more than the average recorded in the first quarter of the year, of 36 licenses per month. In previous years, this number rarely exceeded 30 monthly issues.

Licenses are valid for 90 days, renewable for an equal period. These authorizations are not a guarantee of imports ahead, but sector agents confirm that the explosion of numbers reflects the moment of the fuel market, indicating efforts by companies to import larger volumes or, at least, diversify their origin ahead.

ANP data on fuel supply show that, between local production and imports, Petrobras supplied 81% of the country’s diesel in the first four months of the year – the equivalent of 13.6 million cubic meters. The percentage is lower than that provided by the state-owned company in 2019 (85.12%), the last year before the pandemic, with more stable domestic demand.

Brazilian consumption increases, above all, between August and October, when it is driven by the harvest and transport of the agricultural crop. At the same time, says Felipe Perez, downstream strategist at consultancy S&P Global, post-pandemic global demand has returned faster than supply, and refined cargoes should become increasingly disputed.

Until the beginning of the war in Ukraine, around 60% of the diesel consumed by Europeans came from Russia, a percentage that gradually dropped due to sanctions. According to Perez, Europe’s natural alternative is diesel from refineries in the Middle East and Asia, but US cargo from the Gulf of Mexico has also come into European sights.

The president of the Brazilian Oil and Gas Institute (IBP), Eberaldo de Almeida, says that Europeans have already imported diesel from the Atlantic coast and that the market is “shorter”. This, he says, is clear from the longer waiting time for loads and the drop in volume available for orders. “Before, there were at least 15 diesel ships available; today, there are two or three.”

Three companies hold 81.5% of imports

The profusion of licenses for importing diesel is concentrated in the three largest importers in the country: vibrate (former BR Distribuidora), root and Ipiranga. According to reports from the National Agency for Petroleum, Natural Gas and Biofuels (ANP), 81.5% of the 848 licenses issued in the first five months of the year belong to the three companies. In terms of volume, the share reaches 76.6% of the total.

Then comes Petrobras, with 10 import licenses, but with the equivalent of 11.9% of the total volume authorized for purchases abroad. Historically, the state-owned company produces at least three quarters of all diesel consumed in the country, but it also imports fuel to fulfill supply contracts.

Former president of the ANP and currently at the helm of the oil company Enauta, Décio Oddone believes that the peak in licenses is associated with the need to guarantee fuel to customers with which the three companies have active or longer-term contracts, even with margins. less attractive than usual.

Small and medium-sized importers, in turn, can wait for a more advantageous price environment to operate. They have stated, however, that the Bolsonaro government’s attempt to interfere with fuel readjustments (which today follow the variation of the barrel of oil on the international market) may make importing the product financially unfeasible.

Independent importers would not be able to compete with Petrobras, which would have prices out of step with those abroad.

Vibra informed that it works to guarantee the supply to the network of contractual and usual customers and that, since the end of last year, it has expanded imports to face the recovery in post-pandemic demand and the signal, given by Petrobras, that there would be limitations for the fulfillment of the integrality of the requests.

‘Atypical orders’

Industry executives have reported “difficulties” to buy more diesel from Petrobras. Sought, the company said that it fully complies with contractual obligations with the distributors, with deliveries of diesel at regular levels. But he said that he follows the ANP’s resolution according to which, in a context of demand greater than supply, the available volume can be apportioned among the companies in proportion to the purchases of each of them in the previous three months.

“Since the end of 2021, diesel orders have been atypical and higher than the expected market and, as a consequence, even after evaluating maximum availability, considering our production and supply capacity, the volume accepted has been lower than the atypical orders”, informed.