Petrobras hikes diesel imports from RIL after refinery fire
14 December 2013
Brazil's state-run oil company Petrobras has booked extra cargoes of fuel with Indian refining major Reliance Industries, most of it diesel, after a fire shut down its fifth-largest refinery two weeks ago, market sources said on Friday.
Petrobras, which is losing heavily on fuel subsidies, has now been forced to burn more cash with rising fuel imports at global prices and reselling it at lower domestic prices.
Petrobras, which has invested heavily in its downstream operations, is now a losing significant amount of money each day importing fuel at world prices.
Reliance, already a routine supplier to Petrobras, will ship some 2.9 million barrels of diesel during December, according to market sources.
RIL produces a total of 23 million tonnes of petroleum fuels, including diesel, petrol and kerosene, at its Jamnagar refinery.
The cargo, loaded on 16 November at the Sikka port that serves Reliance's 670,000 bpd Jamnagar refinery, would help Petrobras to supply fuel to gas stations located in southern Brazil, after the company limited its supplies to several cities.
Petrobras has bought three cargoes and is negotiating an additional shipment after the fire at the 200,000 barrels per day (bpd) REPAR plant in Araucaria, in the southern state of Parana, on 28 November, in Parana state, traders said.
Even after repairs, the REPAR refinery will only run at two-thirds its normal capacity, under the new safety regulations.
The new safety regulations, to be effective from January, will tighten inspection and maintenance rules at the country's 13 refineries, all controlled by Petrobras.
This means, Petrobras, which is already losing money on every barrel of fuel it buys abroad, would have to rely more on imported fuels now.
Petrobras is set to receive a total volume of 3.65 million barrels of fuels from Asia in December, up at least 20 per cent from November.
Neighbouring Ecuador is also scrambling for extra shipments after a fire at its main facility, the 110,000 bpd Esmeraldas refinery.
The shipments that would cater to Latin American demand for imported fuel are expected to add to refinery margins globally.