Article published in Valor Econômico on 14/04/16 highlighted points of the presentation that the director-general of the ANP, Magda Chambriard, made to executives about the need for investments in ports and refineries to allow meeting the demand for fuels in the next 10 years.
Figure 1 – Brazil needs investments in ports and refineries to meet future demand
Source: Disclosure
The first two months of the year already anticipate a more pronounced downward trend for 2016. If in 2015 the drop in fuel sales was -1,9%, in 2016 the scenario that is being outlined is already more worrying, with a downturn in the period of January and February of -5,5% in relation to the already reduced demand of the same period of 2015. Therefore, it is likely that we will have to wait a few years until there is again some growth in relation to the historical peak. However, as infrastructure adjustment is a medium/long term project, it is urgent to discuss this matter as soon as possible.
With the cancellation of the Premium I and Premium II refineries, the construction of new refineries seems a distant alternative. This is due both to Petrobras' current situation and to the worldwide trend of disinvestment in refining. Therefore, in the long term, there is an expectation of growth in imports of derivatives, which will exert significant pressure on the existing infrastructure. Lots of traders in the country are already importing fuels, mainly due to spread between local and international prices.
The logic of importing a significant part of the demand for fuels should change volumes, already consolidated flows and come up against capacity restrictions. The main bottlenecks in the future will be in the ports. A starting point to be considered is the existence of a hub versus importing smaller vessels to more than one port. One possibility, in this case, would be collaborative transport (Vessel Sharing Agreement) between the players interested, at least in the international leg, as it usually happens in the container market.
The decision of which ports to use involves assessing their strategic position, depth of the pier and access channel, and static and dynamic tank capacity. Regarding this last point, an important observation that should enter into the equation is the likely change in the inventory policy per product, since the extension of the resupply interval should increase the necessary inventory coverage.
Today there are few terminals in the country that have all the characteristics to be potential entry points for fuel imports. It is important to take advantage of this period of low demand to adjust and expand the existing infrastructure, avoiding future bottlenecks that will further increase the already exaggerated Brazil cost.
References
http://www.valor.com.br/brasil/4523317/para-anp-pais-precisa-de-novas-refinarias-e-portos
http://www.anp.gov.br/?pg=69299&m=&t1=&t2=&t3=&t4=&ar=&ps=&1461594827704