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Race to refine: An assessment of Latin America s downstream projects Patricia Garip Bureau Chief, Latin America 5 September 2013
Agenda Latin America s current refining landscape A growing appetite for refined products Greenfield projects, upgrades, expansions Brazil s lead China s growing downstream presence Venezuela s retrenchment Outlook
Latin America s shrinking refining landscape Mexico 1,540 Ecuador 137 Colombia 325 Peru 208 Curacao 320 Venezuela 1,310 Brazil 2,070 Chile 220 Argentina 660 ( 000 b/d)
mn b/d Demand: Upward bound, but not so fast LatAm non-oecd oil demand growth lagging Asia-Pacific, the Middle East and Africa 7.5 7.2 Economic growth driving oil demand, albeit more slowly IMF: downward revisions 6.9 6.6 Persistent fuel price subsidies distort demand curve 6.3 2012 2013 2014 2015 2016 2017 2018 Source: International Energy Agency
mn b/d US oil product exports to selected LatAm destinations 2004-2012 800 600 400 200 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 Argentina Panama Venezuela Colombia Chile Peru Brazil Source: EIA
mn b/d US oil products exports to Mexico 2004-2012 600 500 400 300 200 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: EIA
Tightening sulphur limits (ppm) Country Diesel Gasoline Argentina 10 (Grade 3); 500 urban, 1,500 rural (Grade 2) 50 (97-octane) 150 (93-octane) Brazil 10 800, moving to 50 in 2014 Chile 15 in Santiago; 30 in rest of Chile 15 nationwide in Sept 2013 15 Colombia 50 300 Ecuador 500 250 in 2014 150 (90-octane) 600 (87-octane) Mexico 15 80 Peru 50 in Lima/Callao 2,000 in rest of Peru 1,000 50 in 2015 Uruguay 50 30
/USG US Gulf Coast prices for conventional gasoline and diesel 500 400 300 200 100 0 Jan-03 Feb-05 Apr-07 May-09 Jul-11 Aug-13 Conv Unl Ultra low sulfur dsl Source: Argus Media
Nearly 2.5mn b/d in greenfield plans Country Company Refinery Capacity ('000 b/d) Estimated start date Brazil Petrobras/PdV Abreu e Lima 230 Nov 2014/May2015 Petrobras Comperj (1) 165 Aug-16 Petrobras Comperj (2) 300 2018 Petrobras Premium 1 (1) 300 2018 Petrobras Premium 1 (2) 300 2021 Petrobras Premium 2 300 Post 2018 Colombia Llanopetrol Meta 40 2014/15 Cuba PdV-Cupet Matanzas 150? Ecuador PetroEcuador/ 2017 Pacific 300 CNPC/PdV Mexico Pemex Bicentennial 250 2017 Nicaragua Albanisa (PdV- Supreme Dream of 100 2021 Petronic) Bolivar
Selected expansions and upgrades Country Company Refinery Expansion/Upgrade ( 000 b/d) Start-up Uruguay Ancap La Teja Gasoline and diesel desulfurization units 2013 Colombia Ecopetrol Reficar 80 to 165 2014 Ecuador PetroEcuador Esmeraldas Bolivia YPFB Cochabamba, Santa Cruz New FCC, crude, vacuum and visbreaking units 2014 New CDUs 2014 Costa Rica Recope/CNPC Limon 25 to 60 2015 Colombia Ecopetrol Barrancabermeja 245 to 300 2017 Trinidad Petrotrin Point Fortin 160 to 200? Jamaica PCJ/PdV Kingston 30 to 50? Peru Petroperu Talara 62 to 95? Cuba PdV/Cupet Cienfuegos 65 to 150?
Petrobras refineries under construction, planned Abreu e Lima, 230,000 b/d PdV stake discarded? Nov 2014/May 2015 Comperj 1, 165,000 b/d, 2016 Comperj 2, 300,000 b/d, 2018 Preliminary Asian partnerships for Premium refineries 600,000 b/d Premium 1 with Sinopec, two stages, 1 st 2017 300,000 b/d Premium 2 with GS Energy, 1 st 2017 Premium 1 Comperj 1-2 Brasilia Premium 2 Abreu e Lima Planned refinery Refinery under construction
b/d Brazil refined product imports 2003-2012 120 90 60 30 0 2003 2006 2009 2012 Total refined products Gasoline Diesel Source: ANP
Ecuador: Pacific refinery 300,000 b/d in 2017 PetroEcuador/PdV/CNPC Two phases Manta Quito Montecristi ICBC financing Oil-backed loans Planned refinery
Costa Rica: Limon refinery 25,000 b/d to 65,000 b/d Soresco: Recope-CNPC Questions over costs, contracting Chance for project revival under new Recope management? San Jose Planned refinery Limon Elections loom
Peru: Talara refinery 62,000 b/d to 95,000 b/d To be financed by PetroPeru share sale Restoration of PetroPeru Talara Vertical integration La Pampilla upgrade? Lima La Pampilla Planned refinery Refinery
Colombia Cartagena (Reficar) 80,000 b/d to 165,000 b/d, +80pc complete Delayed on labor strife Cartagena Barrancabermeja Bogota Meta Barrancabermeja upgrade Meta refinery? Planned refinery Refinery under construction
Chinese downstream presence rising, with limits Costa Rica Cuba Aruba? Venezuela Ecuador Brazil
Venezuelan presence receding Nicaragua Jamaica Dominican Republic Curacao? Ecuador Brazil
Refinery orphans? Bicentennial Pemex Supreme Dream Nicaragua Argentina, Cuba, Paraguay, Uruguay
mn b/d Latin America oil imports: upward bound 4.5 Regional liquids consumption 4.0 3.5 3.0 2.5 2.0 2005 2010 2015 2020 2025 2030 2035 2040 Mexico/Chile Brazil Other Central and South America Source: www.eia.gov
Reflections Labor strife Lack of Commercial logic Politics? Cost overruns Financing Delays, downsizing, quiet fading Brazil is an exception Venezuela s withdrawal accelerating refining deficit Chinese presence poised to grow, with limits Financing challenges Biofuels LNG Product imports set to rise Brazil as products exporter?
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Patricia Garip Bureau Chief, Latin America Email: patricia.garip@argusmedia.com Phone: +56 22 243 6239 Cel: +56 99 2890089 URL: www.argusmedia.com Copyright notice All intellectual property rights in this presentation and the information herein are the exclusive property of Argus and and/or its licensors and may only be used under licence from Argus. Without limiting the foregoing, by reading this presentation you agree that you will not copy or reproduce any part of its contents (including, but not limited to, single prices or any other individual items of data) in any form or for any purpose whatsoever without the prior written consent of Argus. Trademark notice ARGUS, ARGUS MEDIA, the ARGUS logo, FMB, DeWitt, ARGUS publication titles and ARGUS index names are trademarks of Argus Media Ltd. Visit www.argusmedia.com/trademarks for more information. Disclaimer All data and other information presented (the Data ) are provided on an as is basis. Argus makes no warranties, express or implied, as to the accuracy, adequacy, timeliness, or completeness of the Data or fitness for any particular purpose. Argus shall not be liable for any loss or damage arising from any party s reliance on the Data and disclaims any and all liability related to or arising out of use of the Data to the full extent permissible by law.