Crude Summit: Ecopetrol aims to fill regional fuel gap

Colombia's Ecopetrol will open an office in Singapore to support the growth of its crude exports to Asia as well as plans to expand its third-party petrochemical trading into refined products.

"You cannot grow in Asia without being in Asia," Ecopetrol's commercial and marketing vice president Pedro Manrique said during the Argus Americas Crude Summit in Houston, Texas. "We are confident we will identify more business opportunities."

The trading office will begin operating during the second quarter and will be Ecopetrol's first in Asia.

Ecopetrol's footprint in Asia has already grown with 57pc of its 350,000 b/d of total crude exports going to the region in the third quarter of 2021, up from 15pc in 2016, according to the company's data.

Newer trade routes and as well as closer ties to the US Gulf coast will be needed to ensure the supply of refined production in Latin America, he said.

Fossil fuel demand will continue to grow in Latin America over at least the next 20 years, despite the eminent but slow adoption of electric vehicles (EVs) in the region, Manrique said.

"EVs are going to continue to grow, but it is going to take time for a region like Latin America to change into EVs," Manrique said. "And in that time the region is going to continue to be short of refined products."

The growth estimate and continued need for fuels will be especially true for diesel, given its role in transportation demand, he said.

Yet Ecopetrol has also made one of the strongest commitments to net zero emissions of an oil company in Latin America, as it promised to reduce its emissions to zero by 2050, with an intermediate goal of reducing them by 25pc by 2030, from a 2019 baseline.

Petrobras' footsteps

Ecopetrol noted the leadership of Brazil's Petrobras in both Asia and emissions controls, as the state-controlled company has had an office in Singapore for years and also recently committed to significantly reduce its emissions.

Petrobras' goal is to "produce as clean as possible," Alipio Ferreira, executive manager of global trading at Petrobras, said on the same panel.

Brazil also has an ambitious investment program in fossil fuels under its $68bn 2022-26 business plan to develop more crude assets, especially in the pre-salt area.

Pre-salt crude fields are on track to represent almost 80pc of the country's crude production, up from 70pc this year, as production is forecast to grow to 2.6mn b/d in 2026 from 2.1mn b/d this year — almost 100,000 b/d of growth per year.

Brazil's output averaged around 2.91mn b/d in the first 11 months of 2021, down from almost 2.96mn b/d in the same period of 2020, according to data from oil regulator ANP.

But the share of Petrobras' crude available for export could decline to feed domestic fuel production. The company is ramping up refinery runs to address a rebound in motor fuel demand, particularly diesel, in a trend that is expected to extend deeper into 2022 — another challenge for the company's climate-friendly goals.

By Sergio Meana