Northeast Brazil facing gasoline supply gap

Gasoline supply in Brazil's populous northeast is under pressure as operational problems at a regional refinery and ship delays limit supply ahead of a seasonal demand surge.

Gasoline supply has been impacted this month by an interruption at a fluid catalytic cracking unit at the 333,000 b/d Landulpho Alves refinery (Rlam) in Mataripe, reducing volumes available in Bahia. The situation has left the state in a worse situation that other states, market sources say.

To be sure, state-controlled Petrobras, which operates the refinery, said it is unaware of operational problems at Rlam.

Issues with mooring vessels in Rio Grande do Norte and Paraiba have aggravated supply problems in the region. Covid-related complications at the port of Guamare in Rio Grande do Norte delayed the landing of a gasoline cargo earlier this month. Representatives of local distributors tell Argus that similar delays have been reported at the Cabedelo port in Paraiba and the Fortaleza port in Ceara.

Local buyers have pivoted to the Suape hub in Pernambuco as an alternative source to replenish their bases.

Market participants are already operating under the expectation of increased gasoline consumption in the final weeks of the year, the result of the holiday season and the recent easing of isolation measures adopted to curb the spread of Covid-19. Consumption trends in Bahia point to an even stronger spike in demand than in some other states, sources tell Argus.

Gasoline sales in the northeast region in December 2019 were about 6pc higher than the prior December around 9pc higher than then previous month, according to data from oil regulator ANP.

Higher consumption expected next month

The possibility of new health protocols in Brazil involving the closing of commerce and travel restrictions seems distant, even with the advancement of a second wave of the contagion.

National gasoline consumption this December is projected to increase between 3-4pc over the previous year, according to Valencio Consultoria, which specializes in oil and fuel market trends.

Increased domestic travel during school holidays and a preference for road travel at the expense of air travel are among the factors expected to boost gasoline demand this December.

"With the increase in the price of ethanol in this period, due to the growing season for sugarcane [in the center-south region] and the lower volume of biofuel production, the demand for gasoline at the gas stations should be greater," Valencio's commercial direct Murilo Barco said.

By Gabrielle Moreira and Carolina Guerra