The perspectives of the national oil and gas sector for the coming years are auspicious and challenging. Petrobras announced, in its 2030 Strategic Plan, a production of 4,2 million barrels of oil per day (Mbpd) for 2020, noting that the average for 2013 was 1,93 Mbpd (PETROBRAS, 2014). For this period, planned investments are US$ 220,6 billion, including not only the increase in oil and gas production, but also the 76% increase in oil refining capacity and the consequent production of its derivatives. Figure 1 shows the start-up dates of the new refineries and their contribution to Brazil's refining capacity.
Figure 1 - Start of operation of Petrobras' new refineries and their oil refining capacities
Source: Petrobras and ANP
Today, Brazil imports significant volumes of fuels, mainly diesel oil and gasoline, reflecting the continuous increase in demand for these products and an insufficient national supply. The growth in demand for diesel oil, the main product offered by the new refineries, is associated with the country's economic growth and the consequent increase in the use of rail, road and maritime modes, as well as the growing mechanization of the agricultural sector, which are major consumers of diesel.
Old fleets and the expansion of the country's agro-industrial frontiers, far from consumption and export centers, also contribute to the increase in demand. Even so, the market for this product will reach self-sufficiency and the country will change from an importer to an exporter of the product. Gasoline, with no significant additional production expected, even with the introduction of new refineries, will need greater import volumes each year to supply an estimated growth of between 72% and 76% in the next decade.
This increase is directly associated with the expected growth of the national fleet of light vehicles (ILOS, 2014). Therefore, this scenario foresees changes in the logistical flows of these products, with the need to dispose of large import volumes at maritime terminals, from refinery production to consumption centers in the country, creating investment opportunities in more adequate means of transporting goods. fuels, such as pipelines.
In Brazil, the road modal is predominant in the aggregate transport matrix, being responsible for moving 67,4% of the total cargo volume in the country, against only 3% of the pipeline modal (ILOS, 2013). However, this proportion is not maintained in the oil and gas sector, in which pipeline transport is considered strategic in several stages of the logistics chain, as it is more competitive than other modes.
This competitiveness is established as there is a need for continuous transport of large volumes of fluids, from a supply point to a demand point, with the pipelines delivering a high degree of reliability as they are not subject to meteorological uncertainties or congestion. The large volumes transported and the low variable costs characteristic of the modal offset the high investments required for the construction and implementation of a network of pipelines, such as equipment, labor, expropriations and right of access to land.
The relevance of this modal for the national fuel supply is significant due to the mismatch between production and consumption locations in the country. Currently, 63% of the national production of these products is concentrated in the Southeast Region, while the same region represents 44% of the national consumption. On the other hand, the Midwest Region does not have any refineries and is responsible for 11% of consumption (ANP, 2014). The Osbra pipeline, which connects the Paulínia Refinery (Replan), in the state of São Paulo, to the Terrestrial Terminal in Brasília, has the capacity to transport 887.400 cubic meters of fuel per month, being essential to supply consumption in this region.
Domestic pipelines are classified as transport and transfer pipelines. Transport links connect supply points to consumption points, such as, for example, refineries to fuel distribution bases. Transfer ducts are used to move products between facilities of the same company. Figure 2 shows the Brazilian pipelines for transporting clear derivatives.
Figure 2 - National system of pipelines for transporting clear derivatives
Source: ANP, 2013
Despite the high vocation of the pipeline modal for the transport of oil and derivatives, the pipeline network in Brazil is still small compared to other countries. According to the National Agency of Petroleum, Gas and Biofuels (2013), the ANP, in our country the oil pipeline network has an extension of 1.592 kilometers, while that of derivatives has an extension of 4.438 km, considering only the transport pipelines . Adding up the transfer pipelines, the derivative network reaches an extension of 11.068 km. In the United States, the oil pipeline network is 89 km long and that of derivatives, 153 km, as shown in Figure 3. As a result of this vast extension of the American pipeline system, the US has a 19% share of this modal total transported in TKU in the country, operating at a cost 36% lower than in Brazil (ILOS, 2013).
Figure 3 - US oil products pipeline system
Source: EIA, 2013
The business model of the Brazilian pipeline network goes back to the history of the national oil and gas sector. In 1953, Law No. 2.004 established the state monopoly of oil and natural gas in Brazil, to be exercised by Petrobras and its subsidiaries. The activities of research, exploration, production, refining and pipeline transport of oil and its derivatives in the country would be carried out exclusively by the state-owned company. This legislation remained for 44 years, until its revocation by constitutional amendment nº 9/95, which later allowed the institution of Law nº 9.478/97 (Petroleum Law), in 1997.
Still in force, this law opened the Brazilian oil market to other companies, allowing the exercise of the aforementioned activities through concession, authorization or contract by the Union. However, the current infrastructure of oil product transport pipelines in Brazil is owned by Petrobras and operated by its subsidiary Transpetro (ANP, 2013). Despite the history of high investments in this sector, Petrobras has significantly prioritized the areas of exploration and production (E&P) in its investment portfolio over the years, to the detriment of investments in other areas, such as supply, as shown in Figure 4 .
Figure 4 – Evolution of participation of E&P and supply in Petrobras' business plans.
Source: Petrobras, 2014
The use of national pipeline capacity is regulated by the ANP and is entirely preferable to the owner of the infrastructure, who may load third-party products if there is idle capacity. The legislation guarantees free access to third parties with the permission of the pipeline owner.
Some European countries, such as Spain, Norway, the United Kingdom and Denmark, have an oil and gas market similar to that of Brazil, in terms of state control of activities related to the sector: companies also need concessions or authorizations from the State to exercise such activities.
Spain has a history of oil market monopoly very similar to the Brazilian one, extinct in 1992 and followed by the opening of the market after the country's entry into the European Common Market. Since then, its main state-owned company in the oil and gas sector, Campsa (La Compañía Arrendataria del Monopolio de Petróleos Sociedad Anónima), currently CLH (Compañía Logística de Hidrocarburos), has gradually been converted to private capital, and is currently formed by private sector companies such as Repsol, Oman Oil and BP. Its oil product pipeline network, extending over 4 km, transports oil products owned only by those companies with a shareholding in CLH.
This same business model, which limits the use of pipelines to companies that own the infrastructure and the products that are transported in them, happens throughout Europe, both for oil and derivatives. This is a local market practice, with no regulatory restrictions. Pipelines such as the TAL (Transalpine Pipeline), which transports oil from Italy to refineries in Germany, use their capacity only among the shareholders of the TAL Group – pipeline operator –, among them Shell, BP and ExxonMobil. Another similar example is the SPSE – The South European Pipeline, an oil pipeline located in France, with a length of 769 km, operated and used by a joint venture formed by companies in the sector, such as Total, ExxonMobil, BP and Shell.
In the United States, there are two business models related to transportation pipelines. In both, the pipelines belong to one or more private companies, however, other companies, in addition to the owners, move products through the assets. The pipelines of ExxonMobil Pipelines, a subsidiary and responsible for ExxonMobil's supply sector, follow the model in which the company owns the products handled. Magellan Midstream Partners exemplifies the other model by owning and operating pipelines and providing third-party transportation services.
In both cases, the way in which oil and derivatives transport pipelines are used is regulated by the Federal Energy Regulatory Commission (FERC), an agency of the US Department of Energy. Ferc regulates the tariffs and practices used by the companies that own the pipelines, establishing equivalent service conditions to provide shippers with equal access to pipeline transport.
When comparing the models (Figure 5), we noticed that the Brazilian one differs from the others shown here. As seen, the main difference between the Brazilian model and the American one is in the regulation: while in the first the owner has preference in use, in the second competition between chargers is guaranteed. The European model is closer to the Brazilian model, as the ANP does not restrict the creation of joint ventures or consortia between companies to operate in this market.
Figure 5 – Business models for pipeline systems
Source: ILOS
Even outside the oil derivatives market, the European model was consecrated when Petrobras became a partner of private companies, in 2009, to form Logum Logística SA, the company responsible for building the pipeline system for transporting ethanol between the Midwest and Southeast regions of the country. Logum is a joint venture between the state company (20%), Camargo Corrêa Construções e Participações (10%), Copersucar (20%), Raízen (20%), Odebrecht Transport Participações (20%) and Uniduto Logística (10% ). The system will be operated by Transpetro and will load ethanol from third parties, not exclusively Logum shareholders.
Therefore, there are legally viable alternatives that are different from the current one, if any companies want to invest in the construction, expansion and/or adaptation of the national pipeline network. With the reduction of investments in supply by Petrobras in this segment and the expected increase in the supply and demand of fuels in Brazil, perspectives and opportunities are opening up in the national fuel logistics. This is a major logistical challenge, emphasizing that any transport infrastructure project, whatever the mode, demands a long implementation period.
The construction and operation of new product transport pipelines must follow the technical regulations defined by the ANP and must also be authorized by the agency. And, if it is interesting for companies to become partners for this purpose, there is no ANP regulation that prevents this activity, including with existing pipelines: there is the possibility of transferring ownership of these pipelines with the requirement of a new authorization of operation or construction by the agency.
References
- PNA. Operation Authorizations granted to pipelines. Brazil, October 2013. Available at: www.anp.gov.br. Accessed on: February 2014.
- BRAZIL. Law No. 1.978, of August 6, 1997. Provides for the national energy policy, activities related to the oil monopoly, establishes the National Council for Energy Policy and the National Petroleum Agency, and other measures. Brazil, Presidency of the Republic, 1997.
- BRAZIL. Law No. 2.004, of October 3, 1953. Provides for the National Petroleum Policy and defines the attributions of the National Petroleum Council, establishes the Joint Stock Company, and makes other provisions. Brazil, Presidency of the Republic, 1953.
- CLH. Hydrocarburos Logistics Company. Spain, 2014. Available at: http://www.clh.es/. Accessed on: February 2014.
- EIA. US Energy Information Administration. USA, 2014. Available at: http://www.eia.gov/. Accessed on: February 2014.
- ILOS. Logistics Costs in Brazil. XIX International Logistics Forum. Rio de Janeiro, 2013.
- ILOS. Fuel Supply and Demand Projection. Internal study. Rio de Janeiro, 2014.
- LOGUM. Logum Logística SA.. Available in: http://www.logum.com.br/. Accessed on: February 2014.
- PETROBRAS. 2030 Strategic Plan. Brazil, March 2014.
