Brazil oil output set to rise by 300,000b/d

Oil production in Brazil is expected to increase by over 300,000b/d by end-2021, driven by strong pre-salt investments, according to a report S&P Global Platts shared with BNamericas. 

Bill Fuller, S&P global oil supply and production analytics senior advisor, expects average output to be 2.99Mb/d (million barrels per day) this year, a growth of 190,000b/d year-on-year, and 3.12Mb/d in 2021, up 136,000b/d.

For next year, S&P expects growth mainly in the second half, as projects originally slated for 2020 or 1H21 start-up enter operations. 

“Atapu was expected to come online in early 2020, but was delayed until late June 2020, while [Petrobras-operated] Mero 1 and Sépia fields, expected to come online in early 2021, are now expected in the second half of 2021,” Ashutosh Singh, oil and gas supply and production analytics manager at S&P Global Platts, told BNamericas.

Also, Equinor’s Peregrino Phase 2 in Campos basin, originally scheduled to come online in 2020, is now expected to start in 2021, he added. 

For September and October, average output of 2.85Mb/d is expected, compared to August output of around 3.09Mb/d, S&P wrote, citing data from regulator ANP. The drop will be due to scheduled maintenance of some Petrobras platforms. 

Singh underlined that the projected increase this year and the next will happen irrespective of Brent price, as it is driven by projects that recently came online and are ramping up to capacity, or undertakings that already count with capex commitment or a final investment decision. “These two categories of projects are not impacted by near-term price movements,” he said. 

Refining in Latin America

In a recent report, S&P Global Platts said refinery operations in Latin America continue to ride an upward swing from very low levels experienced over March and April. Refinery crude runs in the region jumped to 3.88Mb/d in August, a 255,000b/d gain relative to June but a 390,000b/d loss from a year ago.  

“Crude throughput climbing up is clearly a positive trend, but upside is limited, and runs are likely to lag historical parameters,” S&P said, highlighting that five years ago Latin American crude runs were just over 5.6Mb/d in August.

With refined product demands moving higher, S&P expects Latin American runs to continue inching higher over the next few months, but not too much, given the limited spare refining capacity in the region. Brazil will carry most of the growth, with smaller contributions expected from Mexico, Argentina and Chile.

S&P Global Platts estimates 2020 refinery crude runs in Latin America at an average 3.69Mb/d, a 320,000b/d fall compared to 2019.

The 2021 outlook on runs foresees growth, considering the COVID-19 impact on demand and refinery operations in the second quarter this year.

Brazilian runs for 2020 are forecast to average 1.73Mb/d, a gain of 35,000b/d compared with 2019, “which, considering the challenge posed by COVID-19 in all levels of the local industry, would be quite an achievement,” S&P said.

Improving gasoline production

Referring to ANP data, S&P said gasoline A (without ethanol) output in August was 405,000b/d, 20,000b/d higher month-on-month and flat year-on-year. 

From January-August, gasoline production averaged 355,000b/d, a 55,000b/d decrease relative to the same period last year. “Evidently, low production in April and May due to demand losses on COVID-19 is skewing the comparison,” S&P said.   

According to latest trade data from ANP, gasoline exports averaged 25,000b/d in August, while imports averaged 45,000b/d. 

Diesel trade

US exports of distillates to Latin America are rising as well. Distillate outflows to the region averaged 905,000b/d in June, compared to 570,000b/d the month prior. 

Over the first six months of the year, the US exported 940,000b/d of diesel to Latin America, about 90,000b/d less year-on-year.

Brazilian purchases in June reached 170,000b/d, recovering from an April dip of 125,000b/d, as local demand fell amid the mobility restrictions to stem the pandemic. Compared annually, US exports to Brazil were only 10,000b/d lower during 1H20.

S&P Global Platts expects the Brazilian distillate market to continue improving, although more modestly, while net diesel imports will soon rise slightly.