Page 12 - LatAmOil Week 17 2020

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It covers an area of about 10,000 square km.
All but one of the requests were filed by cash- strapped Petrobras, which is still recovering from the Car Wash corruption scandal, ANP added. The other request, which covered the onshore field in the Reconcavo Basin, was sub- mitted by a smaller oil company, it said, without
naming the firm.
ANP director Marcel Castilho explained that
both companies had taken this step in response to the coronavirus (COVID-19) outbreak. “The main motivation for these production stops is related to the pandemic, which has led to a reduction in the demand for oil and oil products in Brazil and in the world, and the sharp fall in prices,” he said.
Castilho went on to say that he expected more temporary stoppage requests to be filed in the near future. Petrobras has recently unveiled plans to cut production by 200,000 bpd, so
it will need to rein in development work, he commented.
The coronavirus and its knock-on effects have come at an awkward time for Petro- bras, which announced last December that it intended to sell $20-30bn worth of assets, including eight Brazilian refineries, in the 2020- 2024 period.
The firm also stated last month that it was planned to reduce investments this year by nearly a third to $8.5bn.
The Rio de Janeiro-based NOC is trying to pay down debt and recover from the ongoing corruption scandal, through a strategy based on divesting non-core assets to focus on Brazil’s deepwater pre-salt area. The major, which is one of the largest oil companies in the world, has said previously that additional sell-offs and other cost-cutting measures could boost its equity value roughly 45% by 2021. ™
ARGENTINA
Argentina’s refinery throughput down
ARGENTINA’S oil refineries have been cut- ting throughput this month, and additional reductions are likely in May, according to Argus Media.
The South American country’s total installed processing capacity amounts to about 600,000 barrels per day (bpd), but refineries have not been operating at maximum capacity for some time because of the coronavirus (COVID-19) pandemic’s effect on oil supply and demand conditions. Argus Media said last week that one plant – Raizen, a joint venture between Royal Dutch Shell (UK/Netherlands) and Cosan (Bra- zil) – had taken its 110,000 bpd refinery offline in Buenos Aires earlier this month because it had no more room in its storage facilities and demand levels were low.
Since then, at least one more plant has fol- lowed Raizen’s lead. YPF, the national oil com- pany (NOC), has suspended operations at its 25,000 bpd Plaza Huincul plant in Neuquen Province, Argus Media reported on April 27. It also quoted a company representative as saying, though, that the plant’s methanol production unit was still working.
Meanwhile, other refineries have reportedly reduced throughput to varying degrees. An oil official with close ties to YPF told Argus Media that two of the NOC’s plants – Lujan de Cuyo, a 105,500 bpd plant in Mendoza Province, and La Plata, a 189,000 bpd facility in Buenos Aires Province – were now operating at just 40% of capacity.
At the same time, a representative of Axion said that his company had cut throughput at its 95,000 bpd Campana plant in Buenos Aires Province. Axion is a 50:50 joint venture between
UK-based BP and Bridas, a private company owned by Argentina’s influential Bulgheroni family and China National Offshore Oil Corp. (CNOOC).
By contrast, the 30,500 bpd refinery operated by Singapore-based Trafigura in Bahia Blanca, near Buenos Aires, is currently working at around 90% of full capacity. The commodities trader intends to cut capacity utilisation down to 50% in May and will focus on exports rather than domestic sales, a market source told Argus Media. It may also make further cuts if Argen- tina’s government arranges to keep domestic crude oil prices artificially high, the source said.
According to previous reports, Buenos Aires has considered setting a minimum reference price for the purpose of protecting local oil producers. So far, though, it has not commit- ted to taking this step. It may be reluctant to do so, given that the lockdown policies it imposed on March 20 have led petroleum product con- sumption to drop precipitously, by as much as 80% in some areas. ™
Argentina’s fuel consumption has dropped since March 20 (Photo: File)
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w w w . N E W S B A S E . c o m Week 17 30•April•2020