Fuel demand crawling back in Peru

Fuel demand in Peru is starting to return to pre-pandemic levels after more than 100 days of lockdown.

Eduardo Guevara, board chairman of state-owned PetroPeru, told Argus that demand for the company's products in the first week of July was close to 90,000 b/d and inching up daily.

While demand still falls short of the 110,000 b/d the start of 2020, it is more than double the amount from second half of March when the pandemic hit. Peru's government decreed a lockdown on 16 March and lifted it on 30 June, with strict protocols.

"We are seeing an improvement each day as different sectors of the economy open and start moving to full capacity," said Guevara. "We are getting back to normal."

Total fuel demand nationally averaged a record high of 273,000 b/d in February, according to regulator PeruPetro.

PetroPeru and Spain's Repsol are the country's principal fuel suppliers. Repsol operates Peru's largest refinery, 117,000 b/d La Pampilla, where throughput has recovered off a 30pc trough in April.

Petroperu's 65,000 b/d Talara refinery has been closed since last December as it undergoes a $5.4bn upgrade that will increase capacity to 95,000 b/d. Its two smaller refineries, with combined capacity of 27,500 b/d, were closed in April, but are now fully operating.

Work on the Talara refinery on the northern coast stopped with the pandemic and is slowly recovering. More than 9,000 people were working on the project at the start of the year, but that fell to only around 200 in March.

"We are restarting gradually. We are increasing the number of workers, but will not reach pre-pandemic levels for health safety reasons," said Guevara.

The refinery should be finished toward the end of 2021. Around 90pc of the work has been finished.

Upstream, PetroPeru and other crude producers are struggling to recover from the double hit of the lockdown and oil price collapse in March.

With little production to transport, PetroPeru closed its 100,000 b/d northern oil pipeline in May. The country's four northern jungle oil blocks shut in production in early May. National production is below 30,000 b/d, half the amount from February.

By Lucien Chauvin