Argus Latin Markets
Issue 15-21 | Friday 22 May 2015
PdV refinery shut on power outage: union
Price summary
PdV shut down operations at its 146,000 b/d El Palito refinery
following a regional power outage on Tuesday night, according
to a senior oil union official who works at the facility.
The refinery is “completely inoperative” and will take
up to a week to restart after state-owned utility Corpoelec
restores power to the region, the official told Argus.
PdV denied that the blackout has affected the refinery´s
operations.
El Palito produces gasoline and diesel. The plant´s disruption is likely to exacerbate local fuel shortages.
Corpoelec said an equipment failure at its Planta CentroMoron substation, which is located near the refinery, triggered
the blackout in the western states of Carabobo, Lara, Yaracuy
and parts of Falcon.
Corpoelec, which has categorized the substation equipment
failure as a “major event,” says repairs would be completed and
regional power supplies fully restored before midnight Wednesday.
The blackout that knocked El Palito off line was the second
multi-state outage in less than a month.
A 28 April blackout left 10 of Venezuela’s most populous
states and large parts of Caracas in the dark for over 24 hours
in some areas.
The government blamed unusually hot weather for last
month´s outage and announced expanded power rationing measures aimed at reducing consumption from about
18,600MW as of mid-May to about 17,000MW.
Corpoelec currently has about 17,500MW of operational
generating capacity, according to the electricity ministry.
$/bl
Maya USGC vs ASCI and WTI
65
60
55
hh
50
hh
45
40
27 Mar
16 Apr
Maya
05 May
ASCI
WTI
Copyright © 2015 Argus Media Ltd
Licensed to: Cortney Becker, Argus Media Inc (Houston)
21 May
Unit
Price
Change
Crude
North Sea Dated
$/bl
65.79
+0.11
WTI (June)
$/bl
60.01
+0.13
Vasconia
$/bl
61.26
-0.49
Maya USGC
$/bl
57.49
+0.34
Castilla Blend
$/bl
57.26
-0.49
Products
ULSD fob USGC
¢/USG
194.965
-1.820
87M conv gasoline cargo fob USGC
¢/USG
205.990
+1.490
Ethanol anhydrous fob Brazil
BRL/m³
Paraffinic naphtha cif USGC
$/t
1,421.295
-6.320
537.300
-0.500
LPG
Propane non-LST Mt Belvieu (VWA)
¢/USG
42.449
-5.734
Propane fob US Gulf coast cargo
¢/USG
55.449
-5.734
Freight
Venezuela - USGC
$/t
12.09
+0.21
USGC - Brazil
$/t
36.15
-3.49
Market summary
„„ Latin American crude prices came under pressure
following the award of two tenders for the sale of
Colombian crude and amid difficult to work arbitrages
to the US, the mediterranean and Asia.
„„ Only three cargoes were shipping clean product out
of the US Gulf coast into Latin America, down from 12
the prior week. Gulf coast gasoline prices firmed, continuing on the previous week’s rally as Padd 3 refinery
disruptions shifted domestic arbitrage dynamics.
„„ US ethanol values dropped substantially, hitting
lows last seen in mid-April. US biodiesel differentials
posted gains despite an improving heating oil/soybean
oil (HOBO) spread. Waterborne ethanol quotes edged
lower as both US and Brazilian markets pulled back.
„„ A major found a spot charter for its VLGC British
Commerce earlier in the week after a few attempts the
previous week on failed subjects.
Argus Latin Markets
Issue 15-21 | Friday 22 May 2015
Crude markets
$/bl
Time/
base
15 May
Time/
base
18 May
Time/
base
19 May
Time/
base
20 May
Time/
base
21 May
Change on
week
+0.34
Latin America
Maya USGC
Differential
K-Factor
Isthmus
Differential
K-Factor
Olmeca
Differential
K-Factor
Vasconia
Differential
Diff to Ice Brent
Castilla Blend
Differential
Diff to Ice Brent
Jun
57.09
Jun
56.81
Jun
54.69
Jun
55.53
Jun
57.49
Jun
-2.60
Jun
-2.62
Jun
-2.57
Jun
-2.90
Jun
-2.52
May
-1.20
May
-1.20
May
-1.20
May
-1.20
May
-1.20
Jun
64.12
Jun
64.14
Jun
62.04
Jun
63.10
Jun
65.16
Jun
+4.43
Jun
+4.71
Jun
+4.78
Jun
+4.67
Jun
+5.15
May
+1.00
May
+1.00
May
+1.00
May
+1.00
May
+1.00
Jun
66.13
Jun
66.16
Jun
64.13
Jun
65.06
Jun
67.12
Jun
+6.44
Jun
+6.73
Jun
+6.87
Jun
+6.63
Jun
+7.11
May
+2.75
May
+2.75
May
+2.75
May
+2.75
May
+2.75
Aug
61.79
Aug
61.25
Aug
58.75
Aug
59.72
Aug
61.26
Aug
+0.78
Aug
+0.61
Aug
+0.28
Aug
+0.25
Aug
+0.11
Aug
-5.50
Aug
-5.50
Aug
-5.80
Aug
-5.80
Aug
-5.80
Aug
57.79
Aug
57.25
Aug
55.05
Aug
55.72
Aug
57.26
Aug
-3.22
Aug
-3.39
Aug
-3.42
Aug
-3.75
Aug
-3.89
+1.02
+0.87
-0.49
-0.49
Aug
-9.50
Aug
-9.50
Aug
-9.50
Aug
-9.80
Aug
-9.80
Aug
61.79
Aug
61.25
Aug
59.05
Aug
59.77
Aug
61.31
Differential
Aug
+0.78
Aug
+0.61
Aug
+0.58
Aug
+0.30
Aug
+0.16
Diff to Ice Brent
Aug
-5.50
Aug
-5.50
Aug
-5.50
Aug
-5.75
Aug
-5.75
Jun
59.69
Jun
59.43
Jun
57.26
Jun
58.43
Jun
60.01
Jul
60.54
Jul
60.24
Jul
57.99
Jul
58.98
Jul
60.72
-0.12
Jun
65.40
Jun
65.24
Jun
63.04
Jun
64.25
Jun
66.04
+0.85
Escalante
-0.44
US
WTI Cushing
LLS
Differential
Mars
Differential
ANS USWC
Differential
Jun
+5.71
Jun
+5.81
Jun
+5.78
Jun
+5.82
Jun
+6.03
Jun
62.22
Jun
61.55
Jun
59.05
Jun
60.50
Jun
61.94
Jun
+2.53
Jun
+2.12
Jun
+1.79
Jun
+2.07
Jun
+1.93
Jul
65.69
Jul
65.32
Jul
63.12
Jul
64.07
Jul
65.79
Jul
+4.55
Jul
+4.58
Jul
+4.53
Jul
+4.50
Jul
+4.55
+0.13
-0.32
+1.04
Europe
Ice Brent
Jul
66.81
Jul
66.27
Jul
64.02
Jul
65.03
Jul
66.54
-0.05
Aug
67.29
Aug
66.75
Aug
64.55
Aug
65.52
Aug
67.06
+0.36
Sep
67.75
Sep
67.18
Sep
64.99
Sep
65.92
Sep
67.45
+0.20
Jul
63.82
Jul
63.96
Jul
61.59
Jul
62.16
Jul
64.09
-0.25
Mideast Gulf
Dubai
Crude markets
Latin American crude prices moved lower as arbitrage economics looked to be deteriorating, resulting in the most recent set
of tenders being awarded at wider discounts to Ice Brent.
Colombian medium sour Vasconia came under pressure
from a more difficult to work arbitrage to the US Gulf coast.
And higher than expected volumes of Basrah Heavy coming
into the market made the Mediterranean and Asia-Pacific markets less attractive destinations for Colombian volumes.
But a preliminary loading program released Friday showed
seaborne exports of Russian Urals are set to fall by nearly 5pc
from full April levels to 1.67mn b/d in the period between 1-7
June. The tight supply could firm the medium sour crude's spot
Copyright © 2015 Argus Media Ltd
Licensed to: Cortney Becker, Argus Media Inc (Houston)
price, and it could increase demand for competing Vasconia
cargoes out of Colombia.
A Sinochem tender for 500,000 bl of Vasconia was heard
to have been awarded at the equivalent of close to a $6/bl
discount to August Ice Brent. Loading dates are for the end
of June. Argus assessed Vasconia at the midpoint of Ice Brent
-5.50/-6.10.
Last week’s Perenco tender for 500,000 bl of Vasconia for
loading 20-25 June was heard to have been awarded last week
on a pricing agency Dated basis.
Later in the week, market feedback prompted slightly
wider discounts for Castilla and Escalante, but no transactions were reported. Heavier Colombian Castilla’s assessment
was weakened by 30¢/bl to put it back at a $4/bl discount to
Page 2 of 17
Argus Latin Markets
Issue 15-21 | Friday 22 May 2015
Refined products markets
Unit
Time/
base
15 May
Time/
base
18 May
Time/
base
19 May
Time/
base
20 May
Time/
base
21 May
Change
on week
Latin America
Ethanol fob Brazil anhydrous
$/m³
Ethanol fob Brazil anhydrous
BRL/m³
Ethanol fob Brazil hydrous
$/m³
Ethanol fob Brazil hydrous
BRL/m³
Ethanol cif Brazil anhydrous
$/m³
Ethanol cif Brazil anhydrous
BRL/m³
Biodiesel SME fob Argentina upriver
$/t
n/a
no trade
n/a
no trade
n/a
no trade
n/a
no trade
n/a
no trade
¢/USG
Jun
205.355
Jun
203.710
Jun
199.250
Jun
203.810
Jun
207.940
¢/USG
Jun
-0.325
Jun
-0.400
Jun
-0.250
Jun
-0.300
Jun
-0.300
¢/USG
Jun
205.305
Jun
201.110
Jun
197.500
Jun
201.860
Jun
205.990
¢/USG
Jun
-0.375
Jun
-3.000
Jun
-2.000
Jun
-2.250
Jun
-2.250
¢/USG
Jun
196.955
Jun
195.255
Jun
189.295
Jun
190.900
Jun
194.965
¢/USG
Jun
-3.525
Jun
-3.425
Jun
-3.625
Jun
-3.700
Jun
-3.625
¢/USG
Jun
208.480
Jul
208.950
Jul
202.140
Jul
204.490
Jul
208.740
¢/USG
Jun
+8.000
Jul
+10.000
Jul
+9.000
Jul
+9.500
Jul
+9.750
475.000
477.500
475.000
475.000
467.500
-7.500
1,420.490
1,439.380
1,435.305
1,441.245
1,421.295
-6.320
-6.000
440.000
440.000
440.000
440.000
434.000
1,315.820
1,326.335
1,329.545
1,335.045
1,319.445
-2.975
492.500
492.000
490.500
488.500
487.500
-3.500
1,482.095
+6.395
1,472.825
1,483.085
1,482.140
1,482.205
US
Rbob fob New York barge
Differential
Conventional gasoline fob US Gulf coast
Differential
ULSD fob US Gulf coast
Differential
ULSD (EPA) US west coast pipeline
Differential
+2.615
+1.490
-1.820
+2.180
Paraffinic naphtha cif US Gulf coast
$/t
536.805
547.250
530.835
530.835
537.300
Natural gasoline Mont Belvieu (VWA)
¢/USG
131.875
132.000
127.875
128.375
130.000
-2.125
Reformer naphtha cif USGC differential
¢/USG
-19.000
+3.000
3pc fuel oil fob US Gulf coast
$/bl
53.250
52.400
50.275
50.700
52.300
-1.025
380cst bunker Houston
$/t
343.500
337.500
324.500
330.500
332.000
-11.000
380cst bunker Los Angeles
$/t
352.500
355.500
349.000
352.500
361.000
+1.000
French diesel 10ppm northwest Europe
$/t
608.500
606.250
591.500
591.000
607.750
-4.000
MTBE barge fob Rotterdam
$/t
821.750
849.500
829.750
833.125
847.625
+28.500
HSFO 380cst
$/t
372.250
376.250
361.500
359.250
361.250
-13.000
380cst bunker Singapore
$/t
370.500
372.500
363.500
352.500
362.500
-11.000
conv
-22.000
conv
-21.500
conv
-21.500
conv
-20.500
conv
-0.500
Europe
Asia-Pacific
Vasconia. Argentinian Escalante’s assessment was weakened
by 25¢/bl to between Ice Brent -6.00/-5.50.
Recently strong Escalante differentials to Ice Brent have
made the arbitrage to the US west coast difficult to work
despite strong Alaskan North Slope (ANS) crude values. ANS
prices are being boosted by a reduction in supply which is
common during the summer months as Alaskan production
fields go into maintenance.
ANS last traded for July delivery into the US west coast on
Thursday, when it was sold at a $4.55/bl premium to July WTI.
That transaction was equivalent to close to a discount of $1.46/bl
to July CMA Ice Brent, 18¢/bl stronger than where it had traded
at the beginning of the week. The grade's discount to CMA Ice
Brent has remained between $1.82-$1.46/bl during July trade.
Crude movements to the US west coast could potentially
also be affected after Plains All American's 150,000 b/d Line
901 California onshore pipeline ruptured Tuesday and spilled
Las Flores Canyon Outer Continental Shelf (OCS) crude into
the Pacific Ocean.
Copyright © 2015 Argus Media Ltd
Licensed to: Cortney Becker, Argus Media Inc (Houston)
The 24-inch Plains line runs from Las Flores, where ExxonMobil processes offshore production at a facility with 540,000 bl
of storage, to a terminal in Gaviota. From Gaviota Plains ships
OCS crude to the Santa Maria unit of Phillips 66's 120,000 b/d
San Francisco refinery system and to Pentland Station in Kern
County. Phillips 66 said it was too soon to say whether the refinery's supply would be disrupted. Line 901 was shipping 48,000
b/d when the spill occurred. But later in the week Phillips 66
reported planned maintenance work underway in the Santa
Maria end of its 120,000 b/d San Francisco refining complex.
State of California offshore production in Santa Barbara
county averaged 3,860 b/d in December, the most recent
month for which California Department of Conservation data
are available. Santa Barbara county accounted for roughly
10pc of California offshore production that month, when the
state produced a total of 38,948 b/d crude offshore.
The federally-administered Pacific Region of the Outer
Continental Shelf also produced 53,053 b/d in February, the
most recent month for which Bureau of Safety and Environ-
Page 3 of 17
Argus Latin Markets
Issue 15-21 | Friday 22 May 2015
LPG/NGL markets
¢/USG
Time/
base
15 May
Time/
base
18 May
Time/
base
19 May
Time/
base
20 May
Time/
base
21 May
Change on
week
US
Propane non-LST Mt Belvieu (VWA)
May
47.330
May
46.367
May
44.658
May
44.655
May
42.449
-5.734
Propane fob US Gulf coast cargo
May
60.330
May
59.367
May
57.658
May
57.655
May
55.449
-5.734
Butane non-LST Mont Belvieu (VWA)
May
61.056
May
59.306
May
55.250
May
56.486
May
57.497
-4.421
Natural gasoline Mont Belvieu (VWA)
May
131.688
May
132.063
May
127.479
May
128.577
May
129.964
-2.305
ment Enforcement data are available.
Freight rates from the Caribbean to the US Gulf coast continued to firm, rising to $11.65/t from from $10.38/t a week
earlier. This increased the rate per barrel to closer to $1.70/
bl from about $1.50/bl last Monday, implying that demand for
this route is on the rise.
US imports of Latin American crude decreased markedly for
the week ended 15 May, according to the latest available data
from the US Energy Information Administration (EIA). US imports
of Colombian crude showed the largest decrease, falling to
298,000 b/d from over 660,000 b/d the prior week. This was
the lowest weekly level reported by the EIA for Colombian imports since the middle of March, when they fell to 229,000 b/d.
Mexican imports were at 733,000 b/d, down 174,000
b/d while Venezuelan volumes fell almost 100,000 b/d from
909,000 b/d in the week ended 8 May to 810,000 b/d.
Iraq’s state-owned oil marketer Somo is planning to load
more than 1.2mn b/d of the new Basrah Heavy crude grade
in June, which will bring Iraqi sales from its southern export
terminals to a nearly 3.2mn b/d, a record high.
With June Basrah Heavy exports more plentiful than
expected and remaining uncertainty about quality, its price is
under pressure in Asia-Pacific.
Basrah heavy was offered in the Mediterranean at discounts of about 50¢/bl to its official selling price with traders
$/bl
Vasconia diff to Ice Brent
valuing the grade even weaker. It is not certain if any Basrah
Heavy has traded in the European spot market.
In shipping news, Unipec is planning to charter Suezmax Ridgebury John Zipper from Coveñas, Colombia, to Chiriqui Grande in
Panama starting 25 May, and Phillips 66 scheduled Panamax Stavronisi to leave Coveñas for the US Gulf on the same day.
Statoil was on subjects to charter a Shell-owned Aframaxsized vessel from Coveñas, Colombia, to the US Atlantic coast
starting last Tuesday.
Atlantic, the trading arm of Total, is looking to fix the Aframax Whistler Spirit from the east coast of Mexico to the US
Gulf coast starting 27 May. Atlantic is also looking to schedule
the Aframax Phoenix Strength from the same region to the
Mediterranean or Europe starting 28 May.
US independent refiner Valero is working to schedule the
Suezmax Voyager from the Caribbean to the US Gulf coast on
1 June. Shell is in the process of scheduling the Suezmax Eagle
San Juan from Coveñas to the same region on that date. Spanish company Repsol is looking to take a Suezmax from Coveñas
to Spain starting 3 June.
BP is making arrangements for the Suezmax Lipari to travel
from Uruguay to Chile on 8 June.
ExxonMobil is making arrangements to take the Aframax
Astro Sculptor from the east coast of Mexico to the US Gulf
coast starting 25 May.
$/bl
Castilla Blend vs Mars
0
0
-2
-2
-4
hh
hh
-6
hh
-6
-8
-10
19 Feb
-4
hh
-8
13 Mar
07 Apr
29 Apr
Copyright © 2015 Argus Media Ltd
Licensed to: Cortney Becker, Argus Media Inc (Houston)
21 May
20 Feb
Page 4 of 17
23 Mar
22 Apr
21 May
Argus Latin Markets
Issue 15-21 | Friday 22 May 2015
Key regional freight rates
Load
Port
Discharge
Port
Size
Lump sum $
$/t
Change
Ecuador
Esmeraldas
China
China
Ecuador
Esmeraldas
Peru
La Pampilla
130,000
3,100,000
23.85
50,000
575,000
Ecuador
Esmeraldas
Chile
San Vicente
11.50
50,000
675,000
13.50
Venezuela
Pto La Cruz
USGC
Houston
Venezuela
Puerto La Cruz
China
China
12.09
+0.21
7,500,000
28.85
Venezuela
Pto La Cruz
USWC
Los Angeles
50,000
26.36
+1.93
-3.64
Colombia
Covenas
USGC
Houston
70,000
10.84
+0.18
Colombia
Covenas
China
China
260,000
Brazil*
Rio de Janeiro
China
China
260,000
Brazil
Rio de Janeiro
USGC
Houston
Brazil
Rio de Janeiro
USWC
Los Angeles
Venezuela
Pto La Cruz
Singapore
Singapore
260,000
Dirty
Caribbean*
70,000
260,000
India WC
7,500,000
28.85
+1.93
32.41
+0.90
130,000
27.05
+8.39
130,000
39.08
+7.82
6,500,000
25.00
+1.92
270,000
6,600,000
24.44
4
38,000
1,425,000
38.16
38,000
390,000
10.26
-1.58
38,000
600,000
15.79
-3.29
Clean
USGC*
Houston
Chile
USGC
Houston
Brazil
USGC*
Houston
EC Mexico
USGC
Houston
Colombia
USGC
Houston
Argentina
38,000
43.11
-4.17
USWC
Los Angeles
Chile
38,000
1,100,000
28.95
-6.58
USWC
Los Angeles
Mexico
38,000
350,000
9.21
-0.66
Rio de Janeiro
38,000
Pozos Colorados
Rosarito
36.15
-3.49
— Southport Maritime. Phone: 561.775.3333; Email: [email protected]. *Argus
Refined product markets
Only three cargoes were detected this week shipping clean
product out of the US Gulf coast into Latin America, down
from 12 the prior week. Gulf coast gasoline prices firmed,
continuing on the previous week’s rally as Padd 3 refinery
disruptions shifted domestic arbitrage dynamics. Regional
diesel values fell.
A fluid catalytic cracker (FCC) malfunction at a Gulf coast
refinery boosted gasoline prices early in the week, and prices
held robust even after the refiner postponed the proposed 30day turnaround to repair the glitch.
$/bl
Castilla Blend diff to Ice Brent
As Gulf coast gasoline prices rallied, the feasibility of shipping barrels into Latin American markets became increasingly
unfavorable for potential buyers. These changes tightened
the price spread between the Gulf coast and New York Harbor
markets as well.
Regional ultra-low sulfur diesel (ULSD) prices decreased by
nearly 2¢/USG in weekly comparison, but the arbitrage opportunity into the New York Harbor market remained tight. The
price spread between the two markets narrowed marginally in
week-over-week comparison to 5¢/USG.
The three cargoes booked for Latin America were the Alam
Bistari, the Hafnia Andromeda and the Energy Protector. Each
¢/USG
USGC 87M
-9
210
200
-10
190
-11
hh
hh
180
hh
hh
170
-12
160
-13
20 Feb
150
23 Mar
22 Apr
Copyright © 2015 Argus Media Ltd
Licensed to: Cortney Becker, Argus Media Inc (Houston)
21 May
Page 5 of 17
19 Feb
13 Mar
07 Apr
29 Apr
21 May
Argus Latin Markets
Issue 15-21 | Friday 22 May 2015
of these vessels was seen fixed with 240,000 bl of clean product, offloading in Argentina and Chile.
Strong prices due to refinery problems have prevented the
US west coast from booking exports to Latin America. No new
cargo information was detected this week.
A Peruvian tender offering to sell 200,000 bl of Talaraquality heavy N+A naphtha loading in the second half of June
closed on 19 May. It was reportedly awarded to an international trading company, though this was not confirmed.
Strong demand in Panama was not enough to support
prices last week. The price for high-sulphur 380cst fell nearly
5.5pc Wednesday-to-Wednesday, outpacing crude’s losses
week-on-week.
Bunker fuel prices remained cheaper on the US west coast,
muting demand for fuel in Latin American Pacific ports.
Labor unrest muted bunker demand in el Callao, Peru
late last week as striking workers caused delays for vessels at
wharf. Workers began to return to their posts this week, but
ship owners were reportedly still wary of the situation and
were choosing to bunker in other regional ports.
In Buenos Aires, Argentina high demand for fuel oil by
regional utilities tightened availabilities and pushed prices
upward throughout the week. By Wednesday one supplier was
unable to offer bunkers due to a lack of product, and did not
except resupply until late this week or early next.
Availabilities were also heard to be tight in Montevideo,
Uruguay and Petrobras was still not offering heavy bunkers in
the port of Suape, Brazil due to high demand for the fuel for
power generation.
Biofuels markets
US ethanol values dropped substantially this week, hitting lows
last seen in mid-April. The selloff came as the EIA released
data showing rising ethanol production and a sizeable build in
inventories. At the Argo in-tank transfer hub values fell more
¢/USG
USGC ULSD
than 10¢, trading down to 157.25¢/USG. Rule 11 railcars were
down 9¢ in a weekly comparison, sliding from 169¢ to 160¢/
USG. New York barges dropped 8.25¢ to reach 164.75¢/USG,
while the west coast market lost 7.5¢, falling to 175.50¢/USG.
RIN markets traded down on the week, with ethanol
credits posting larger losses than other RIN categories. Current
year ethanol RINs lost 5.88¢, dropping to 68¢/RIN on Thursday.
Values fell primarily in the last two days of the week, alongside weaker trading sessions for physical ethanol. The selloff
came despite the release of EPA EMTS data that showed E15
RIN generation decreased 3.3pc from March to April. Current
year biomass-based diesel credits had marginal gains through
most of the week before falling a penny Thursday to 86.50¢/
RIN, down a half-cent in weekly comparison. The B15/E15
spread continued to widen as E15 values fell, gaining 5.38¢ to
come to 18.50¢/RIN. The Argus Renewable Volume Obligation
(RVO) measure of 2015 compliance costs ended the week at
6.49¢/USG, 0.47¢ lower than last week’s mark.
US biodiesel differentials posted gains despite an improving heating oil/soybean oil (HOBO) spread. Houston B100
premiums to the June Nymex ULSD benchmark increased 6¢
to 100¢/USG, after a trade was recorded at that level in the
middle of the week. Chicago differentials strengthened 4.50¢
to 114.50¢/USG, finding support from a trade at that level
on Thursday. NYH premiums saw the largest gains, climbing
from 96¢ to 103.50¢/USG. Outright prices slid alongside June
Nymex ULSD contracts, which lost 4.39¢ to settle at 185.59¢/
USG at the end of the week.
Waterborne ethanol quotes edged lower as both US and Brazilian markets pulled back. Arbitrage opportunities withered by
mid-week as US values started to tumble. Offers for anhydrous
ethanol on a fob Santos basis were heard $5/m³ lower at $485/
m³, while buying levels were stable. Lower offers failed to stir
interest amid news of export volumes scheduled to leave Santos
at the end of the month to the Gulf coast region. Front month
export cargoes of hydrous fuel ethanol shed $6/m³ to $434/m³
Mont Belvieu propane fob vs cif ARA
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Argus Latin Markets
Issue 15-21 | Friday 22 May 2015
as lower domestic valuations filtered into waterborne quotes.
Quotes of imported US anhydrous ethanol fell $7/m³ to $520/
m³, yet buyers stand $65/m³ from this level.
Soybean oil and SME biodiesel fell in tandem in Argentina as
export differentials failed to counter plummeting benchmark
values. June premiums added 0.35¢/lb to end the week at
CBOT +0.3¢/lb but failed to counter the futures market's losses
in Chicago. The July CBOT contract shed 1.09¢/lb to settle
at 32.25¢/lb by the end of the week. July-delivering product
edged 0.1¢/lb higher to CBOT -0.5¢/lb, while August to September product retreated by 0.6¢/lb to fall back at CBOT -0.6¢/
lb. Non-EPA SME biodiesel was seen $29/t lower at $627/t in the
port of San Lorenzo on the back of cheaper feedstock.
LPG Markets
A major was able to find a spot charterer for its VLGC British
Commerce on Tuesday, after a few attempts the prior week
failed on subjects.
The vessel was heard booked in the upper $90s/t on a
Houston/Flushing basis for loading at the US Gulf coast 18-19
June. The vessel was fixed to a trader at a rate similar to the
latest Houston/Flushing based deal, which was heard booked
at $98/t for two consecutive voyages to a Latin American NOC.
The VLGC Kodaijisan was booked for initial loading between
9-10 June at the US Gulf coast.
While US/Flushing freight held steady for this recent deal,
the spot freight rate between the Mideast Gulf and Asia Pacific
continued to climb during Tuesday's session, moving to $108/t,
the highest level since 20 October 2014.
Nearby butane exports are poised to rise as the Mariner
South terminal in Nederland, Texas, started up fresh monthly
contracts for exclusive butane loading. An Asian lifter on
Mont Belvieu fob propane with ANSI
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Tuesday began its first of a monthly series of LGC-sized butane
cargo loadings at the new export terminal. The buyer began
loading on Tuesday aboard the Clipper Moon.
Meanwhile a Handymax spot fixture was heard done for
early June butane loading. The Navigator Umbrio, which is
currently expected to reach Balboa, Panama, on 29 May, was
heard fixed for a 3-4 June Gulf coast butane loading at the
Targa LPG export terminal in Galena Park, Texas. The pricing
and players involved in the deal were veiled.
A Latin American NOC emerged into the spot freight market on Wednesday seeking a vessel to lift at the US Gulf coast
between 6-8 July.
The NOC finished taking offers on Thursday and the G.
Paragon was heard on subjects at $95/t for 6-8 July lifting at
the US Gulf coast on a Houston/Flushing basis.
Market players believe the next deal has the potential to
boost the Houston/Flushing spot VLGC freight rate into tripledigits territory.
A trader entered the market on Wednesday with six ships
available for relet in the west of Suez market. The vessels
ranged in size from Handymax to VLGC.
According to market sources, both the Nashwan and Leo
Sunrise will be available for relet in the Caribbean in the first
half of June. The Handymax Gaschem Hamburg will be open
off La Libertad, Ecuador, early next month as well.
On Wednesday the VLGC BW Broker cast off from the Targa
terminal in Galena Park, Texas, with plans to move to Singapore. The VLGC Motivator returned to the US Gulf coast for a
scheduled loading after a discharge in Santos, Brazil.
At the primary import hub in Suape, Brazil, the VLGC Captain Markos NL continued to discharge LPG over the weekend
after its 14 May arrival. The VLGC loaded product at the Mariner South export terminal in Nederland, Texas.
The VLGC Hellas Fos, which also loaded LPG at Nederland,
reached Suape's port on Monday.
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Page 7 of 17
Argus Latin Markets
Issue 15-21 | Friday 22 May 2015
Latest news
Colombia oil producers reported 119 blockades in the first
quarter of 2015, up from 114 in the same period last year, according to ACP data.
Petrobras signs $7bn in Chinese bank deals
Brazil’s state-controlled Petrobras has entered into $7bn in financing agreements with China Development Bank and China's ImportExport Bank, part of around $53bn in funding China made available
to Brazil during Chinese Premier Li Keqiang’s visit to Brasilia.
At the signing ceremony, Brazilian president Dilma Rousseff said the loans reflected confidence in Petrobras and would
help strengthen activities in sub-salt projects in which Chinese
companies are already involved.
In April, before Petrobras published audited 2014 results,
China Development Bank granted Petrobras a $3.5bn loan as
part of a two-year cooperation agreement.
Petrobras has since filed 2014 audited financials, which
included a $2.5bn write-off for losses related to corruption,
and says it plans to tap international bond markets next year.
Last week, the company approved a $1bn bond sale, but did
not set a date for a launch of the offering.
China has steadily expanded its presence in Brazil’s oil
industry through billions in funding deals and the participation
of Chinese state-owned companies in offshore projects.
State-owned firms CNOOC and CNPC each hold a 10pc
working interest in the 8bn-12bn bl Libra sub-salt prospect.
Petrobras operates the field with a 40pc operating-take. Total
and Shell each hold a 20pc working interest.
China’s Sinopec is partnered with Spain’s Repsol in subsalt production at the Santos basin’s Sapinhoá field. The joint
venture’s take from the field was 43,644 b/d in March, only
behind Petrobras and the UK’s BG.
The other deals cover a wide range of infrastructure
projects, including feasibility studies for a railway that would
connect Brazil’s coast with pacific ports in Peru. The project is
aimed at bypassing the Panama Canal for commodities exports
from Brazil to China.
Protest shuts in Colombia crude flows
A community protest has impacted production at Canadian
independent Pacific Rubiales´ Rubiales and Quifa heavy oil
fields in Colombia.
The company said around 2,600 bl were shut in at Quifa.
The oil chamber (ACP) blamed a “criminal gang” for hijacking a peaceful protest in a bid to extort the oil industry.
Puerto Gaitan, the Meta province municipality adjacent to
the two fields, said it was protesting against Pacific Rubiales for
breaching a 21 April labor deal and refusing to engage in dialogue.
Pacific Rubiales and its partner state-controlled Ecopetrol
did not comment on the accusations and say the “violent acts”
were carried out by “unidentified aggressors”.
Pacific Rubiales operates 160,000 b/d Rubiales and
57,000 b/d Quifa.
Copyright © 2015 Argus Media Ltd
Licensed to: Cortney Becker, Argus Media Inc (Houston)
Pacific Rubiales reaches deal with Alfa, Harbour
Canadian independent Pacific Rubiales has agreed to a cash
buyout offer from Mexico's Alfa Group and US-based Harbour
Energy valued at C$2bn ($1.67bn).
Pacific Rubiales, the largest Latin American independent
oil and gas producer, has struggled to shed non-core assets
and raise cash as it plans to enter Mexico and diversify oil
and gas production. The firm derives the majority of its oil
and gas output from Colombia.
Alfa already owns holds 18.95pc of Pacific Rubiales shares.
The value of the transaction, including the share purchase
and Pacific Rubiales´ debt, is estimated at around $5bn.
Alfa and Pacific Rubiales have already formed a joint venture to bid for onshore and shallow water acreage in Mexico’s
upstream licensing round this year.
Pacific Rubiales said its board has approved the deal with Alfa
and Harbour, which must be approved by shareholders in July. The
parties hope to finalize a transaction during the third quarter.
Opposition to the proposed takeover is mounting. A group
of activist investors led by Panama-based O’Hara Administration intends to oppose the deal.
O’Hara says the group “may take any and all actions” to
block the acquisition.
Pacific Rubiales is the largest oil producer in Colombia after
state-controlled Ecopetrol. But the firm lost its footing after Ecopetrol decided in March not to extend its operating contract for
the flagship Rubiales heavy oil field after it expires in June 2016.
Following the sharp decline in oil prices that started in
mid-2014, Pacific Rubiales was dealt another blow in Colombia
when a plan to export LNG from its La Creciente natural gas
field in a partnership with Belgium´s Exmar was shelved.
The company has sought to diversify away from Colombia
in recent years, picking up assets in Brazil, Guyana, Peru, Guatemala and Belize, as well as Papua New Guinea. It has also
spun off assets in a bid to shore up its finances.
Pacific Rubiales bet heavily on Mexico´s historic opening,
establishing an office and a partnership with Alfa.
The company lost $1.3bn in 2014. It is traded on the Toronto and Colombian stock exchanges.
Harbour is a company formed by investment fund EIG
Global Energy Partners and commodities trader Noble Group.
Pacific Rubiales raises oil flows before takeover
Canadian independent Pacific Rubiales, on the eve of an
expected takeover, is focusing on alternative oil fields in Colombia and Peru in an effort to substitute for output declines
at its mainstay Rubiales field.
Page 8 of 17
Argus Latin Markets
Issue 15-21 | Friday 22 May 2015
The company reported first quarter net oil and natural gas
flows of 152,650 b/d oil equivalent (boe/d), up by 2.6pc from the
same quarter last year. The bulk of output came from Colombia.
Net output at heavy oil Quifa SW adjacent to Rubiales increased to 29,812 b/d in the first quarter, up by 34pc from a year
earlier. Light and medium oil flows rose by 18pc to 55,587 b/d.
The company says production growth was offset by a 17pc
decrease in net production at Rubiales in comparison with the
same period last year mainly because of permitting delays associated with a water treatment project.
Rubiales produced around 160,000 b/d gross oil with
54,000 b/d net to the company in the first quarter, representing 35pc of total net first quarter production, down from 44pc
a year earlier.
In June 2016, the firm’s contract to operate Rubiales
expires and the license will be returned to state-controlled
Ecopetrol.
Pacific Rubiales is currently in talks with Mexico´s Alfa
and US Harbour Energy for an estimated $5bn acquisition of
all issued and outstanding common shares. The firm did not
indicate when it expects the deal to close.
Pacific Rubiales spent $226mn in the first quarter this year,
down from $758mn in the fourth quarter and from $469mn in
first quarter 2014.
The firm is in negotiations to sell its 30pc share of its Pacific Midstream unit for $200mn and expects to close the deal
in the second quarter.
The company posted a net loss of $722mn in the first
quarter, which reflected the crude price decline plus a $499mn
non-cash impairment on assets.
Pemex hints at downstream divestment
Mexico’s state-run Pemex is considering winding down its refining
and petrochemical activities if its downstream operations remain
unprofitable, chief financial officer Mario Beauregard said.
The company´s six aging domestic refineries are considered inefficient alongside their counterparts on the US Gulf
Coast, where refineries have access to abundant crude and
natural gas from shale deposits.
Pemex says it wants to focus on more profitable upstream areas.
The company´s proposed shift away from downstream operations comes on the eve of the opening of the refined products
market under a sweeping energy reform passed last year.
Pemex is already facing upstream competition in a series
of tenders for acreage that began in December 2014.
Earlier this year Pemex shelved a $2.8bn plan to upgrade five of its six refineries, including 190,000 b/d Madero,
200,000 b/d Minatitlan, 245,000 b/d Salamanca, 330,000 b/d
Salina Cruz and 320,000 b/d Tula. The company is hoping to
line up partners to invest in the refineries before restarting
Copyright © 2015 Argus Media Ltd
Licensed to: Cortney Becker, Argus Media Inc (Houston)
the upgrade projects.
"The first thing we´re going to do is find partners that can
give us new tools, which we don´t have, to turn around all of
these activities," Beauregard said.
Among the companies that were awarded the contracts
before they were suspended are ICA Fluor, Tecnicas Reunidas,
Samsung, Foster Wheeler and Mexican consortium ACS, Dragados and Cobra.
A sharp decline in oil prices since mid-2014 and a government-imposed $4.1bn cut in Pemex spending this year have
increased financial pressure on the firm, even as production
and exports decline.
Pemex could have a hard time trying to sell its domestic
refineries in light of their operational inefficiency, bloated
staff and allegations of corruption and fuel theft.
Mexican crude has grown heavier and most of its domestic
refineries lack coking units.
The idea of divesting downstream assets is an about-face
for Pemex, which until recently had sustained a proposal to
build a new 300,000 b/d refinery in Tula. Outside of Mexico,
Pemex owns part of the 340,000 b/d Deer Park refinery in
Texas with partner Shell.
Pemex processed 1.058mn b/d of crude in first quarter
2015, down by 9.3pc from a year earlier, with a negative refining margin of $0.15/bl.
Pemex produced 2.319mn b/d of crude in March, down by
6.1pc compared to a year ago, and by 0.55pc from the previous month of February, according to the latest available data.
Petrobras platform explosion cuts output
An electrical explosion on Brazil’s state-controlled Petrobras’
P-56 platform injured two workers and knocked out production
at the unit for almost six hours, Brazil’s national oil workers
union FUP said.
Petrobras says the incident was caused by a short circuit
during routine maintenance. The firm says it has notified the
relevant authorities and met with union leaders to make recommendations to prevent a recurrence.
Brazilian oil regulator ANP says it will wait to see Petrobras’ report on the incident before deciding to assess fines.
The 141,000 b/d P-56 semi-submersible unit is located in
the Campos basin’s Marlim Sul field where it is responsible
for 83,109 b/d of oil equivalent production, including around
76,000 b/d of 16º API crude. In March, Marlim Sul produced
around 176,000 b/d of oil.
Petrobras exports jump but currency brings woes
Brazil’s state-controlled Petrobras saw crude exports soar to
281,000 b/d, a 44pc year-on-year increase in the first quarter, and the downstream division swung into profit. But the
company's overall $1.86bn profit was an 18pc drop against the
Page 9 of 17
Argus Latin Markets
Issue 15-21 | Friday 22 May 2015
$2.28bn recorded in the same period of 2014, even if it was a
strong rebound from the $9.72bn loss in the fourth quarter.
The decrease was mainly the result of a more than 20pc drop
in the value of the Brazilian real against the US dollar, which
caused the company’s net financing expenses to swell from
$713mn in the previous quarter to $1.96bn in the first quarter,
Petrobras said.
"We are working to maintain our financial and economic
performances at high levels," chief executive Aldemir Bendine
said in a note to investors.
Increased Asian demand for medium grade crude produced
in the sub-salt regions of the Santos basin should help push
Petrobras’ exports from a 230,000 b/d average in 2014 to around
350,000 b/d this year, a Petrobras executive said recently.
The company’s oil production from Brazil averaged
2.149mn b/d, a slight drop the 2.150mn b/d produced in the
fourth quarter of 2014 but a 12pc year-on-year increase.
Petrobras says domestic output should grow to 2.121mn b/d
this year, a 4.5pc increase, plus or minus 1pc, over 2014 flow
rates. Domestic oil production is only expected to grow by 3pc in
2016 to 2.185mn b/d, down from an original target of 2.5mn b/d.
Domestic gas production jumped from 453,000 b/d of oil
equivalent (boe/d) in the fourth quarter of 2014 to 467,000
boe/d in the first three months of this year.
Total production, including oil and natural gas in Brazil
and abroad, was 2.803mn boe/d, an 11pc increase over the
2.531mn boe/d produced in the same period of 2014 but almost unchanged compared with the previous quarter.
Production at domestic refineries shrank to 1.964mn b/d in
the first quarter from from 2.171mn b/d in the fourth quarter of 2014, the result of scheduled maintenance and lower
domestic demand. Utilization rates for domestic refineries
dropped by 12pc points from 98pc in the previous quarter to
86pc in the first quarter.
A 3pc gasoline and a 5pc diesel price increase granted in
November 2014 improved the company’s margins on domestic
fuel sales, but lower oil prices eroded the company’s gains on
crude exports.
Crude imports, mainly of lighter grades that are mixed at
domestic refineries with heavier Campos basin crude, averaged 277,000 b/d in the first quarter, a 23pc drop from the
359,000 b/d in the same period of 2014.
And the lower cost of foreign crude helped the company’s
downstream division swing to a $2.15bn profit in the first
quarter, a dramatic turnaround from $2.03bn loss in the same
period of 2014. The gains from the advantageous mismatch in
domestic and foreign fuel prices was undercut by weakening
domestic demand, partially the result of a slowdown in the
country’s construction industry.
Brazil’s construction industry has been rattled by a kickback scandal involving Petrobras and the country’s biggest
Copyright © 2015 Argus Media Ltd
Licensed to: Cortney Becker, Argus Media Inc (Houston)
construction and engineering firms. The firms are alleged to
have diverted funds from inflated Petrobras contracts into the
coffers of Brazil’s ruling Workers’ party (PT) and other coalition allies.
Petrobras has temporarily banned around two dozen mainly
Brazilian firms from bidding on future contracts. The situation
has pushed three firms into bankruptcy protection, and more
are expected to follow.
Last month, Petrobras reported a $2.5bn write-off related
to corruption in its audited third-quarter 2014 results. The
company says it intends to recover that amount from firms and
executives involved in the scheme.
Last week, at Petrobras’ request, federal prosecutors froze
assets of Brazilian firms Camargo Corrêa, Galvão Engenharia,
OAS totaling around R780mn ($260mn). Federal prosecutors
say the scam involved around $2.1bn, amounts they too will
seek to have restored.
Lower oil prices and scandal have forced Petrobras to
reduce ambitious upstream and downstream expansion plans.
Investment spending in the company’s downstream segment
dropped 70pc year-on-year, from $2.10bn in the first quarter
of 2014 to $632,00mn in the first three months of 2015.
Investment in domestic exploration and production
decreased 13pc year-on-year, to $4.88bn from $5.6bn, but accounted for 78pc of the total $6.23bn invested in the quarter.
Petrobras' capex spending should be around $29bn this
year, down from an original $44bn, and 2016 spending will be
even lower at $25bn. The company will release its 2015-19
business plan next month.
Sub-salt flows lift Petrobras’ April output
Increased production from sub-salt fields helped push Brazilian state-controlled Petrobras’ domestic oil output to 2.134mn
b/d in April, a 1.2pc increase over March and up by 10.5pc
from a year earlier.
Output from sub-salt fields located in the Campos and
Santos basins reached a record 715,000 b/d in April, a 6pc
increase over the 672,000 b/d the previous month and up by
74pc on the previous year.
Around 74pc of the oil produced in Brazil’s sub-salt regions
belongs to Petrobras, with the remainder shared among its
international partners.
Scheduled maintenance at other production platforms
undercut sub-salt production gains, holding April domestic
output 3.3pc below the 2.212mn b/d production record set in
December 2014. The increase in April reverses a downwards
trend that held production in the first quarter to 2.149mn b/d,
slightly below the 2.15mn b/d average in the previous quarter.
Natural gas production in Brazil averaged 73.3mn m³/d
(2.58bn ft³/d), down slightly from the record 74mn m³/d produced in March but up by 14pc on a year earlier.
Page 10 of 17
Argus Latin Markets
Issue 15-21 | Friday 22 May 2015
Petrobras' overseas output averaged 189,900 b/d of oil equivalent (boe/d) in April, up less than 1pc compared with March.
Foreign oil production averaged 102,200 b/d, a less than
1pc increase, resulting from the start of new production wells
at Saint Malo and Lucius in the Gulf of Mexico. Gas produced
abroad fell slightly to 14.8mn m³/d, the result of a Petrobras’
recent sale of acreage in Argentina’s Southern basin.
Total production, including oil and natural gas in Brazil and
abroad, averaged 2.785mn boe/d, a less than 1pc increase
compared with March but up by 8.8pc year-on-year.
Petrobras’ domestic oil production for the first four months
of 2015 was 2.145mn b/d, an 11.5pc increase over the 1.924
b/d produced in the same period of 2014. Domestic output
should grow to 2.121mn b/d this year, a 4.5pc increase, plus
or minus 1pc, over 2014, the company said.
Scheduled maintenance shutdowns planned for this year
should undercut stronger year-on-year growth in the first
fourth months of 2015. Petrobras said planned production unit
downtime could result in an average loss of 50,000 b/d this
year, compared with 30,000 b/d in 2014.
Petrobras will only bring one production unit on stream
this year, the 150,000 b/d Cidade de Itaguai, which is scheduled for the subsalt Lula field in the fourth quarter.
Petrobras has slashed investment spending for this year
from an originally planned $44bn to $29bn. Around 80pc is
earmarked for upstream spending.
Mexico to export crude to South Korea
Mexico’s state-run Pemex will export crude to South Korea’s
Hyundai Oilbank during the second half of the year, Pemex said.
The deal will provide Hyundai’s refineries with an initial
5mn bl of Maya and Isthmus crude, which can be increased if
necessary.
Pemex has already sold crude to Hyundai on an occasional
basis. The deal is part of Pemex's strategy to broaden its export destinations amid sinking revenues.
In March, exports fell 5.9pc compared to the previous
month, leading to a 2.56pc decrease in export revenues.
A sharp decline in international oil prices have also taken
its toll on Pemex revenues, while the firm still funds about a
third of Mexico’s public expenses.
In the first quarter of 2015, Pemex increased exports towards East Asia and other regions, while the Americas significantly reduced imports.
In 2014, the Americas accounted for 72.5pc of all exports,
18.8pc went to Europe and the remaining 8.7pc went to East
Asia and other regions.
Rosneft expands in Brazil's Solimões basin
Russia’s state-owned Rosneft has inked a $55mn deal with
Brazilian independent PetroRio for the acquisition of an ad-
Copyright © 2015 Argus Media Ltd
Licensed to: Cortney Becker, Argus Media Inc (Houston)
ditional 55pc stake in the challenging Solimões basin project,
the company said.
The deal expands a prior $96mn agreement covering the sale
of a 6pc stake in 19 natural gas-prone blocks in the Solimões
basin located in the remote Amazonas state. PetroRio has since
returned three of those blocks to Brazilian oil regulator ANP.
Signed in 2014, the initial deal would have left Rosneft with
a 51pc stake in and operatorship of the onshore BT-SOL-4 and
BT-SOL-4A concessions, where the blocks are located. In March,
PetroRio said it had only received $72mn of the acquisition
costs, the result of international sanctions against Russia.
The acquisition costs for PetrRio's remaining stake in the
project plus amounts already paid puts total acquisition cost
at around $127mn. The new deal excludes the acquisition of
four heli-transportable drilling rigs, which had been part of
the original agreement.
The deal is still subject to ANP approval, which is expected
to be formalized in mid-2015.
“The acquisition of the remaining interest in the Solimões
Project will allow Rosneft Brasil to continue the exploration
program in frontier areas, focused on oil opportunities, and
advance joint work with Petrobras on the monetization of
proven gas resources,” Rosneft said.
Since July 2014, Rosneft and PetroRio have been working with
Brazil’s state-controlled Petrobras on ways to monetize the estimated 540mn bl of oil equivalent locked in the Amazon acreage.
Petrobras also holds stakes in Solimões basin blocks and
currently operates a gas pipeline in the region. Tapping into
Petrobras' 5.5mn m³/d pipeline appears to be the most viable
solution although others, such as liquefaction and power generation, have also been discussed.
PetroRio, formerly known as HRT, says the elimination of
the exploration risk in Solimões will allow it to focus on oil
production in Brazil. The company is still looking to unload 10
exploration licenses in the Orange and Walvis basins located in
offshore Namibia.
PetroRio currently produces around 9,300 b/d of 20˚API
crude from its shallow water Polvo field located in the Campos
basin, and is in the process of finalizing a $150mn acquisition
of Shell’s 80pc operating-stake in the Campos basin’s deepwater 22,000 b/d Bijupirá and Salema fields.
Guyana will take “harder line” with Venezuela
Guyana’s new government will take “a harder line” than the
previous administration in dealing with Venezuela over oil and
gas exploration in disputed waters, officials said.
The APNU-AFC coalition unseated the PPC party in elections on 11 May, leading to the installation of retired army
brigadier David Granger on Sunday as president of the Englishspeaking republic in northern South America.
Venezuela has consistently claimed the Essequibo region
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Argus Latin Markets
Issue 15-21 | Friday 22 May 2015
that covers the western two-thirds of Guyana as its own. The
dispute, a legacy of British colonialism, has prevented both
countries from demarcating their maritime boundary.
Granger said he supported the previous administration in
the territorial dispute with Venezuela, but that the Guyanese
response to recent incidents “was not robust enough.”
The last flare-up in relations occurred in October 2013,
when the Venezuelan navy seized a research vessel, alleging
that it had entered into Venezuela's maritime territory, an
assertion that Guyana denied. The vessel had been working in
the Roraima block on behalf of US independent Anadarko, and
was released after eight days.
More recently, Venezuela objected to ExxonMobil’s drilling
on the Stabroek block under a production sharing contract
from Guyana.
The Venezuelan foreign ministry has sent two letters to
ExxonMobil´s Guyana unit demanding the firm cease work.
ExxonMobil and Guyana’s government said on 16 March that
they were evaluating the results of the well to determine if a
discovery there is commercial.
Venezuela has not reacted publicly to the ExxonMobil
statement, but sources say the government will continue to
use diplomatic channels and is unlikely to intervene in ExxonMobil's operations the same way it did with Anadarko earlier.
That could change, however, depending on how the new Guyana government proceeds.
Guyana produces no oil or gas, and imports 10,000 b/d
from Venezuela and Trinidad and Tobago.
Brazil ethanol output to inch up this season
Ethanol production from Brazil’s 2015/16 center-south sugar
cane harvest is expected to inch by 1-2pc over the previous
harvest, according to leading industry consultancies.
Local consultancy Datagro sees ethanol output reaching
26.78bn liters (461,482 b/d) in the 2015/16 season, which officially began on 1 April, up from 26.15bn l in last year´s season.
International commodities analysts FCStone revised up their
projection for the 2015/16 cane crop to 582.9mn tonnes from
their previous projection of 571mn t issued in late February.
FCStone sees ethanol output reaching 26.4bn l this season,
up modestly from their previous projection of 26bn l.
Datagro issued a more bullish crop projection of 591mn t.
Both Datagro and FCStone attributed the crop increase to
improved precipitation in February and March, which helped
the cane to recover from a severe drought in 2014.
Datagro is projecting that mills in the region will direct
57.1pc of the cane harvested this year to ethanol production,
in line with FCStone’s projection of 57.3pc.
Datagro expects exports to reach a mere 2.8pc of the total
center-south crop.
Both consultancies agree that mills will increase produc-
Copyright © 2015 Argus Media Ltd
Licensed to: Cortney Becker, Argus Media Inc (Houston)
tion of anhydrous ethanol, which is used as a fuel additive.
FCStone is forecasting that anhydrous output will reach 11.3bn
l, up from 10.7bn l in the 2014/15 harvest.
Despite increased demand for hydrous ethanol amid higher
gasoline prices, FCStone is projecting a modest decline in hydrous output to 15.2bn l from 15.39bn l in the 2014/15 crop.
The scenario could change if Brazilian state-controlled
Petrobras increases the gasoline price. Petrobras had been
selling gasoline locally at above international prices since
November 2014, but the recent uptick in the international oil
price has reversed this scenario.
According to local economic consultancy Tendencias, Brazil is
now selling gasoline at a 5.8pc discount to the international price.
Colombian court suspends $2bn utility auction
A Colombian court has temporarily suspended the government’s sale of its majority stake in power utility Isagen just
days before the 19 May auction.
Colombia’s State Council administrative court ruled to
temporarily suspend the sale of the government’s 57.61pc
stake in Isagen because the sale could “damage the public
interest.”
Three foreign companies had been pre-qualified to participate in the bidding: France´s Engie, Chile´s Colbun and
Canada´s fund Brookfield Asset Management.
Others that had previously shown interest include Spain´s
Gas Natural, China´s Huadian, US Duke Energy and Brazilian
Geracao Paranapanema.
The government is hoping to raise 5.25 trillion pesos
($2.2bn) from the sale to pay for infrastructure investment,
including a huge road-building campaign.
This is the third time the sale has been suspended. In
March 2014, the same court temporarily blocked it in response
to legal action taken by an activist group that wants to keep
the utility in state hands. The following August, the finance
ministry suspended the sale because of uncertainty surrounding the start-up of the utility’s 820MW Sogamoso hydro plant,
which finally occurred at the start of this year.
Finance minister Mauricio Cardenas called on the state
council “to clarify the process,” and “make a determination as
soon as possible.”
Biofuel blends cut Petrobras gas, diesel sales
An increase in mandatory biodiesel and ethanol blends cut
Brazilian state-controlled oil company Petrobras’ first quarter gasoline and diesel sales and imports, according to Jorge
Celestino, the company’s downstream director.
Diesel sales dropped by 4pc to 907,000 b/d, compared to
947,000 b/d in the first quarter of 2014. The company attributed the decline to the increase in the biodiesel blend to 7pc
from 6pc on 1 November 2014, as well as lower diesel demand
Page 12 of 17
Argus Latin Markets
Issue 15-21 | Friday 22 May 2015
from infrastructure projects.
Gasoline sales declined by 5pc to 573,000 b/d from 601,000
b/d in the first quarter of 2014. The increase in the ethanol
blend on 16 March to 27pc from 25pc depressed gasoline sales,
as did the increased number of companies importing gasoline.
Petrobras imported an average of 345,000 b/day of oil
products, down 16pc over the first quarter of 2014. Gasoline imports reached roughly 50,000 b/d and diesel imports
reached about 150,000 b/d in March. Celestino said he expects diesel imports to stay at that level but expects gasoline
imports to continue to drop in the second quarter as hydrous
ethanol gains market share.
Hydrous ethanol accounted for 23pc of sales of fuel for
light vehicles in March compared to 16pc a year ago, according to Brazil's leading sugar and ethanol association Unica.
Hydrous ethanol sales benefited from a government decision to re-impose a R$0.22/l ($0.2775/USG) gasoline tax,
known as the CIDE, on 1 February. The tax had been cut to
zero in 2012 in order to curb inflation.
Ethanol-producing Minas Gerais state also adjusted a
value-added tax known as the ICMS on 17 March, stimulating hydrous ethanol sales. The state raised the ICMS tax on
gasoline to 29pc from 27pc, while lowering the same tax on
ethanol to 14pc from 19pc.
Despite the increase in Brazilian biofuels sales, Petrobras'
own biofuels division, Petrobras Biocombustivel, posted a net
loss of R49mn ($16.3mn) in the first quarter, down 35pc from
the R75mn loss posted in the first quarter of 2014.
Petrobras to sign naphtha contract with Braskem
Brazilian state-controlled oil company Petrobras expects to
sign a long-term contract to sell naphtha to local petrochemicals giant Braskem by June, Petrobras' downstream director
Jorge Celestino Ramos said.
The two companies are still negotiating and are close to
reaching an agreement, he said on an investor call.
In February, the two companies reached a last-minute
agreement to extend the naphtha supply contract for six
months. This was the third extension of the contract.
Petrobras saw its domestic sales of naphtha decline by
30pc in the first quarter to 123,000 b/d, compared to 178,000
b/d in the first quarter of 2014.
Petrobras attributed the decline in its naphtha sales to
weaker demand from Braskem.
Braskem depends on Petrobras for 70pc of its naphtha requirements and imports the rest from other suppliers. Because
of logistical constraints, Braskem cannot import a greater
percentage of its naphtha demand.
Once the two companies agree on a long-term contract,
the price can potentially be adjusted retroactively.
Brazilian conglomerate Odebrecht controls Braskem with a
Copyright © 2015 Argus Media Ltd
Licensed to: Cortney Becker, Argus Media Inc (Houston)
38pc stake. Petrobras holds 36pc and the remaining shares are
publicly listed.
Brazil prepares for LNG-based power auction
Four thermal power projects that would use regasified LNG
are competing in a closely watched Brazilian governmentsponsored auction next month.
The reserve energy auction is restricted to gas-powered
projects located in Brazil’s southeast and centre-west regions
with access to gas distribution infrastructure and transmission lines. The plants must have installed capacity of at least
130MW and will be required to operate for a minimum of eight
hours a day during the contract period.
Successful projects will sign 20-year supply contracts with
distributors and deliver energy to the grid from 1 January
next year. Because of limited domestic gas supplies, they will
use LNG imported through one of state-controlled Petrobras’
three LNG terminals and delivered to the thermoelectric
plants through swaps contracts.
Six projects with total installed capacity of 1,065MW initially submitted applications to participate in the auction on
15 June, but two have pulled out, a government official tells
Argus. The auction was originally scheduled for 29 May.
The energy ministry approved nine points for gas delivery, located adjacent to gas pipelines in the states of Rio de
Janeiro, Sao Paulo, Mato Grosso do Sul and Espirito Santo. All
of the locations have the minimum required excess capacity of
1mn m³/d. Petrobras can grant up to 3mn m³/d of regasification capacity to projects that participate in the auction.
The auction’s ceiling price of 581 reals/MWh ($194/MWh)
is above the R388/MWh spot market ceiling price set on 1
January, but below last year’s spot ceiling price of R822/
MWh. The auction aims to reduce the risk of power rationing in 2016 and to boost the reliability of the distribution
network, especially at times of peak demand.
Ten more Brazil ethanol mills to close
An additional 10 sugar and ethanol mills in Brazil’s centersouth region will likely suspend activities this season, according to Brazil’s leading sugar and ethanol association Unica.
Unica estimates that roughly 80 mills have been forced to
suspend activities in recent years. Of this total, 44 mills have
filed for bankruptcy protection.
Local investment bank Itau BBA estimates that Brazil’s ethanol industry has roughly R50.5bn ($16.8bn) in outstanding debt.
Many mills invested aggressively in expansion in 2005-2008,
only to see their margins evaporate since 2010, largely because of the government’s fuel pricing policy which subsidizes
gasoline, whereby reducing ethanol demand.
When a mill closes, it typically sells its sugarcane to other mills
to process, reducing overhead costs while maintaining cash flow.
Page 13 of 17
Argus Latin Markets
Issue 15-21 | Friday 22 May 2015
Russia's Eriell to set up shop in Argentina
Russian oilfield services group Eriell will begin operations in
Argentina, according to the government.
Eriell vice president Zemfira Djemileva told Argentina’s
industry minister Debora Giorgi on 18 May that the company’s
board has already named official representatives to the country. Eriell, which provides well drilling and workover services
and is majority owned by Gazprombank, was not immediately
available to comment.
Argentina has been trying to woo international investors
to tap its promising shaleformations, which the US Energy
Information Administration ranks second for gas and fourth for
oil in global potential resources.
Ecopetrol to sell stake in EEB utility
Colombia’s state-controlled Ecopetrol will sell its 6.87pc stake in
Bogotá-based power utility Empresa de Energía de Bogotá (EEB).
“The offer will open on 20 May and will remain valid until
21 July of this year,” Ecopetrol said.
Ecopetrol is hoping to raise around $442mn through offering its 631,098,000 ordinary shares for a fixed price of Ps 1,740
pesos per share ($0.70 per share).
Colombian Ecopetrol is struggling to raise capital as it plans
a new strategy that, according to the company’s new chief
executive Juan Carlos Echeverry, will aim at exploration in the
offshore US Gulf of Mexico, offshore Caribbean and enhanced
recovery applications at key onshore fields in Colombia.
Last week, Ecopetrol said it wants to raise $700mn by the
end of the year through selling non-core and exploration assets.
The company has already started a process to sell its
5.32pc stake in Colombian power transmission company ISA
and is holding a series of auctions to sell interest in exploration acreage.
The company attracted 20 companies in its first upstream
round around three weeks ago in which five offshore blocks
and three onshore blocks were on offer.
First round bids are due by the end of June and another
two rounds are scheduled for later this year.
Ecopetrol declined to comment on the companies interested and which blocks are up for sale.
China’s CMEC eyes Curacao refinery project
Chinese state-run engineering firm CMEC is discussing an
upgrade of some units associated with Curacao’s governmentowned 335,000 b/d Isla oil refinery.
Curacao has been looking for an investor to upgrade the
facility, improve emissions controls and clean up the polluted
site. The discussions with CMEC appear to be focused on the
refinery´s associated power, steam and water units.
“We are having the discussions to see how we need to
adapt our systems to meet the requirements for moderniza-
Copyright © 2015 Argus Media Ltd
Licensed to: Cortney Becker, Argus Media Inc (Houston)
tion,” Isla plant manager Henny Barbolina said.
“We could improve the plant’s efficiency, and expand it, so
both sides would benefit.” CMEC chief executive Zhao Yan said.
Isla is operated by Venezuela’s state-run PdV under a longterm lease that expires in 2019.
Curacao will discuss the upgrading of the refinery with
other Chinese companies and with “some from Russia and
other countries,” a government official told Argus.
PdV will determine whether it will renew its lease “based
on the nature of the agreement we hope to reach with an
investor,” the official said.
Venezuelan officials have said they are not interested in
buying the facility.
Isla processes about 150,000 b/d of Venezuelan crude, and
produces gasoline, naphtha, diesel, jet fuel, asphalt, base oils
and lubricants.
PetroEcuador receives cutter stock offers
State-owned PetroEcuador received five offers in a tender to
purchase 1.05mn bl of cutter stock, divided into five shipments of 210,000 bl each for delivery starting on 7-9 June.
Citizens offered a $3.58/bl discount to the US Gulf Coast
diesel 2 price. Trafigura offered a $1.52/bl discount, Vitol unit
Arkham -$0.10; BB Energy $1.28/bl, and Astra Oil $8.10/bl.
On 16 December, Citizens Resources won a tender to supply
630,000 bl of cutter stock to PetroEcuador starting in January.
Ecuador uses cutter stock mostly to produce fuel oil that
supplies thermal power plants.
Argentinian biodiesel exports to US set to climb
Inquiries for exports of soy methyl ester biodiesel certified by
the US Environment Protection Agency from Argentina have increased throughout May on the back of recovering US demand
for the biofuel.
The rebound in fossil fuel prices has helped drive the
better outlook for the Argentinian exports, as US distributors
were heard seeking cheaper volumes abroad to comply with
blending requirements.
Prices of SME biodiesel peaked at $900/t on 4 May for fob
Houston barges after hitting a resistance level at $800/t on 2
April. Talks for EPA-certified biodiesel leaving from the port of
San Lorenzo were heard between $750/t and $800/t between
8 and 11 May.
In Argentina, the emerging EPA-certified SME export market
quickly overshadowed an anemic non-EPA SME biodiesel business. The market for non-certified material had been dormant
since demand from Asia and Africa plummeted after the meltdown in oil prices during the second half of 2014. Last week,
the premium for EPA certified biodiesel against regular product
was said to hover at $140/t, according to market sources.
That country’s production capacity of EPA-certified product
Page 14 of 17
Argus Latin Markets
Issue 15-21 | Friday 22 May 2015
remains limited to a handful of big players, however, such as
Cargill, LDC, Noble and Bunge which dominate the market.
These new opportunities are seen with relief by Argentinian producers who rely heavily on export markets for soy
products such as raw beans, meals, oil and biodiesel. The
Argentinian biodiesel industry is particularly affected after
the EU imposed anti-dumping tariffs on biodiesel imports from
Argentina in 2013.
Argentina's soybean-based biodiesel exports plunged by 76pc
in the first quarter of 2015 to 95,305t compared with a year
earlier, the worst three-month period for the sector since 2008.
Gas exports to Colombia to start in 2016: PdV
Venezuela´s state-owned PdV says it plans to start exporting
around 40mn ft3/d (1.12mn m3/d) of natural gas to Colombia
in January 2016 through a cross-border pipeline that is currently used to import Colombian gas.
The gas for Colombia will come from the Perla offshore
field in the Cardon 4 block in the Gulf of Venezuela, PdV Gas
subsidiary chief executive Anton Castillo said.
Cardon 4 is a joint venture led by Spain´s Repsol and Italy’s
Eni with 32.5pc each. PdV holds a 35pc stake.
Perla, scheduled for start-up next month, will be Venezuela’s first-ever offshore gas production. Initial output of 150mn
ft3/d will ramp up to 450mn ft3/d by the end of this year,
800mn ft3/d in 2017 and peaking at 1.2bn ft3/d in 2019.
Deputy energy minister Jose Gregorio Prieto said earlier
this month that all of Cardon 4’s first-stage production of
450mn ft3/d is earmarked for delivery mainly to PdV’s 940,000
b/d CRP refining complex on the Paraguana peninsula, which
includes the 635,000 b/d Amuay refinery and the nearby
305,000 b/d Cardon refinery.
Some first-stage gas will also be shipped to state-owned
utility Corpoelec and state-owned Pequiven’s petrochemical
plants in Carabobo and Zulia states, according to Prieto.
The gas should help to displace some imported diesel at
the industrial facilities.
Venezuelan gas exports to Colombia through the underutilized Antonio Ricaurte pipeline will increase through 2017
as Perla ramps up and new production comes on stream from
PdV´s own Mariscal Sucre offshore gas project slightly north of
the Paria peninsula, PdV says.
Colombia has been delivering about 50mn ft3/d of
gas to Venezuela from Guajira province fields in recent
months. But in the absence of new discoveries, Colombia
has a looming gas deficit. A group of power generators
plans to import LNG through a new terminal on the Caribbean coast starting late next year.
PdV was supposed to have reversed the pipeline in 2012
once its own production got underway, but the plan was delayed several times.
Copyright © 2015 Argus Media Ltd
Licensed to: Cortney Becker, Argus Media Inc (Houston)
Guyana shifts energy policy to president
Guyana’s new government has dissolved the natural resources
ministry and shifted the increasingly significant energy portfolio to the ministry of the presidency.
Guyana´s changes to the energy portfolio coincides with
growing indications of oil deposits in an offshore area over
which neighboring Venezuela has long claimed sovereignty.
ExxonMobil said it is analyzing a "significant" oil discovery on
the Stabroek block offshore, where it is working in cooperation with Guyana.
The energy portfolio shift was announced by new President
David Granger upon appointing his new cabinet. Granger heads
the ministry of the presidency. Retired army colonel Joseph
Harmon has been appointed minister of state in the ministry
of the presidency, Granger said, and will have some responsability for energy matters.
Neither the ministry of the presidency nor Harmon has replied
to a request from Argus for a comment on ExxonMobil’s discovery.
Caracas has objected to ExxonMobil's drilling on the Stabroek block under a production sharing contract from Guyana.
Guyana's new government said it will take "a harder line"
than the previous administration in dealing with Venezuela over
exploration in disputed waters, officials said earlier this week.
Guyana produces no hydrocarbons, and imports 10,000 b/d
from Venezuela and Trinidad and Tobago.
Brazil center-south ethanol output to rise 4pc
Brazil’s 2015/16 center-south ethanol production will reach
27.27bn l (470,047 b/d), up 4.3pc over the 2014/15 crop, according to Brazil’s leading sugar and ethanol association Unica.
Unica attributed the increase in production to the larger
sugarcane crop, which is expected to reach 590mn t, up 3.3pc
from the 571.3mn t 2014/15 crop. Precipitation levels in
recent months are slightly above average, helping to improve
the quality of the sugarcane after the 2014/15 drought.
Unica sees hydrous ethanol production reaching 16.3bn l,
up 6pc over the 2014/15 harvest. Output of anhydrous ethanol
will increase by roughly 2pc to 10.9bn l. Anhydrous ethanol
is used as a fuel additive and hydrous ethanol is sold at the
pump, competing directly with gasoline.
Unica attributed the increase in hydrous ethanol production to greater domestic demand, following recent tax measures which favor ethanol over gasoline. First quarter sales
of hydrous ethanol in Brazil increased by 27pc, while gasoline
sales fell by 1.9pc compared to the same quarter of 2014, according to oil regulator ANP.
An increase in the anhydrous ethanol blend requirement on
16 March will increase ethanol demand by 1.1bn l this season,
according to Unica estimates.
With increased domestic demand, Unica expects ethanol
exports to decline 40pc this season to roughly 1bn l from 1.4bn
Page 15 of 17
Argus Latin Markets
Issue 15-21 | Friday 22 May 2015
l in the 2014/15 season.
Unica’s technical director Antonio de Padua Rodrigues expressed concern over the declining capacity that the industry
faces following recent mill closures. Unica estimates that
since 2008, roughly 80 mills have closed because of financial
difficulties, cutting the region’s milling capacity by 12.5mn t.
This means that if the region has above-average precipitation, more cane could be left standing in the field in December when the rainy season officially begins.
Mills in the center south will continue to favor ethanol
production over sugar. Unica is projecting that 58pc of the
crop will be directed to ethanol production, up from 57pc in
the 2014/15 season.
After getting off to a strong start, ethanol output in the first
six weeks of the 2015/16 harvest, which officially began on 1
April, declined by 1.7pc over the previous season to 3.18bn l.
The delay was a result of rainy weather in Sao Paulo state.
Despite the recovery of the cane crop, Unica director
Elizabeth Farina said that the local industry is unlikely to
resume investments in capacity, in part because of continue
regulatory uncertainty.
Brazil hydrous ethanol demand on the rise: SCA
Demand for hydrous ethanol in Brazil will reach 27.8bn l
(479,059 b/d) by 2020 from 16.5bn l in the 2014/15 sugar cane
harvest, according to Marinho Ono, director of ethanol trading
firm SCA Trading.
To meet this demand, Brazil needs to increase cane output
by 25pc to 800mn t by 2020 or risk losing market share to
gasoline, he said.
Ethanol has gained market share in recent months following tax benefits which have increased the cost of gasoline at
the pump, making ethanol more competitive for drivers of
flex-fuel vehicles.
Hydrous ethanol, which competes at the pump directly
with gasoline, should end the year with over 20pc of the light
vehicle fuel market, according to Ono.
Based on current consumption patterns, Brazil will need to
increase hydrous ethanol production to 27.8bn l by 2020 from
16.5bn l in 2014/15 to maintain current market share.
SCA expects the 2015/16 center-south cane crop to reach
582mn t, up by 2pc from the previous crop.
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Argus Latin American Coverage
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