Page 5 - LatAmOil Week 19 2020

LatAmOil COMMENTARY LatAmOil
 But the outlook is not uniformly bleak. In sev- eral Latin American states, refiners are slowly starting to bring their facilities back online.
Colombia
One of the operators moving in this direction is Ecopetrol, Colombia’s national oil company (NOC).
On May 12, Ecopetrol’s CEO Felipe Bayon reported that his company had brought some refining capacity back online in response to a slight rise in domestic fuel demand. Speak- ing during a conference call on the NOC’s first-quarter performance, he noted that pro- cessing volumes had climbed by around 25,000 bpd within the last few days.
“We have been able to very quickly adapt and adjust the runs to cope with the reduction in demand. But [we can] also very quickly ramp up again,” Bayon said, according to a transcript of the call.
He indicated that Ecopetrol had ramped up production at only one of its two refineries. Specifically, he said that the NOC had brought processing volumes at the 250,000 bpd Bar- rancabermeja plant up from 110,000 bpd to 140,000-141,000 bpd while leaving the 165,000 bpd Cartagena plant’s throughput unchanged at 110,000 bpd.
The CEO tied the increase to the Colombian government’s decision to put a partial end to the lockdown regime imposed in March. Bogota has started allowing some sectors of the economy to open back up, and this is affecting domestic fuel consumption, he said.
“We are seeing demand increase very mar- ginally and slowly,” he said, according to the transcript. “We will continue to synchronise [the re-opening] with increases in activities.”
Argentina
Ecopetrol’s Argentinian counterpart YPF also sounded a hopeful note during its own confer- ence call on first-quarter results.
On May 12, Sergio Giorgi, the NOC’s vice-president for strategy and business devel- opment, said that YPF had partially reversed a decision to reduce refinery throughput. The company has resumed operations at the Plaza Huincul refinery in Neuquen Province, and the plant is now operating at around 55% of its design capacity of 25,000 bpd, he explained.
At the same time, he noted, YPF’s other two refineries – the 105,000 bpd Lujan de Cuyo plant in Mendoza Province and the 189,000 bpd plant near Buenos Aires – continue to operate belowfullcapacity,astheyhavedonesincemid- March. These facilities saw capacity utilisation average 47% in April, he reported.
According to Giorgi, the company had brought the Plaza Huincul refinery back online because fuel demand was showing signs of a slow recovery. Consumption levels bottomed out in mid-April and are now on the upswing, he said.
He cautioned, though, that YPF was still operating below capacity. The company is not
ready to go back to purchasing feedstock from outside suppliers and has filled up most of its crude and fuel storage tanks, he said. Argus Media quoted him as saying that the NOC’s petroleum product storage tanks could hold 14mn barrels and were 75% full, while crude storage tanks could hold 8mn barrels and were around 90-94% full.
Brazil
Meanwhile, Brazil’s NOC Petrobras is also ramping up downstream operations.
According to data from the country’s Minis- try of Mines and Energy cited by Argus Media, the company’s refineries brought average capac- ity utilisation up to 66% during the May 7-11 period. This marks a substantial increase on the figure of 52% reported in mid-April, the minis- try said. (It did not say whether all of Petrobras’ plants had been affected.)
As in Colombia and Argentina, the upswing in throughput levels follows moves to ease lock- downs. Nevertheless, public health measures still appear to be exerting a strong influence on the oil-processing sector.
Petrobras has said that rising LPG demand is one of the factors underlying the increase in refineries’ capacity utilisation. Demand is higher because Brazilians are using more LPG as cook- ing gas while they remain at home, Argus Media explained.
Initially, it added, Petrobras was not prepared to meet this surge because it was busy cutting refinery runs. This move caused LPG output to sink to 122,000 bpd in March, down by 5.3% month on month. It also led the company to import larger amounts of the fuel in April – and to work on pushing domestic production levels up in May. As refinery throughput rises, it may be able to cut imports.
Conclusion
In short, refiners in Brazil, Argentina and Colombia all seem to be taking steps in the direction of returning to normal. They are responding to the partial lifting of lockdowns by producing more of the fuels that consumers and companies will need.
Even so, they are not moving quickly. Thus far, they have only restored some of their shut- tered capacity – a logical move, given that these three countries have not eliminated all restric- tions on activities such as work, travel and shop- ping. And in Brazil’s case, one of the very things driving the increase in refinery throughput is the fact that many people are continuing to stay home.™
Ecopetrol Barrancabermeja refinery (Photo: File)
“ refineries have
only restored some of their shuttered capacity
Thus far,
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