Latin American oil giants battle fuel costs, debt and pipeline blowouts

Petrobras raises fuel prices for consumers

Brazilian motorists are expected to pay more at the pump soon after the country’s state-owned oil company, Petrobras, raised gasoline and diesel prices on Wednesday, Reuters reported. The move comes amid fluctuations in global markets, the company said. The company, also known as Petróleo Brasileiro, said in a statement that the average price of gasoline at the refinery gate will drop from 3.09 reais to 3.24 reais ($0.58) on litre, while the price of diesel will increase from 3.34 reais to 3.61 reais per litre. reais. “These adjustments are important to ensure that the market continues to be supplied on an economic basis and without the risk of shortages by the different actors responsible for serving the different Brazilian regions: distributors, importers and other producers,” Petrobras said. The oil giant added that until last October it had reduced the price of gasoline and maintained the price of diesel, but after 77 days it had decided to “readjust its selling prices of gasoline and diesel to distributors”. The price increases are “in balance with the market, following the upward and downward variations” which have been affected by “external volatilities and the exchange rate”, the press release adds.

Venezuela expected to resume diluted crude oil exports

Venezuela’s state-owned oil company PDVSA will resume exports of diluted crude oil (DCO) this week for the first time in nine months, Reuters reported. PDVSA was forced to cease production of DCO as a result of US trade sanctions, given the lack of diluents that aid in export production. However, following an agreement reached in September between the government of Venezuelan President Nicolás Maduro and Iran, PDVSA now has access to Iranian condensate, allowing changes in DCO’s production and shipping strategies, reported Reuters. Given the increase in inventories of diluted crude oil, PDVSA has resumed its exports to Asia, so DCO does not continue to take up storage space.

Venezuela gas pipeline explosion blamed on ‘criminal saboteurs’

Venezuela’s state-owned oil company PDVSA said an explosion along a pipeline was an act of “criminal sabotage”, Reuters reported on Wednesday. Officials in Anzoátegui state in eastern Venezuela said the explosion took place on Tuesday evening. There was no word on who was responsible for the explosion, or if there were any casualties. It was likely caused by “attempts to puncture the pipeline,” state governor Luis José Marcano said in a Twitter post. Authorities said the damage would be repaired quickly.

Mexico swaps bonds to reduce Pemex’s debt burden

Mexico’s state-owned oil company Pemex has reduced its debt burden by $3.2 billion, Bloomberg News reported on Sunday, citing government officials. Pemex swapped soon-to-maturity debt for a new 10-year bond as part of a refinancing plan. Efforts to get the debt-ridden company back on its feet also include direct capital injections and tax breaks, reported Monday. The administration of President Andrés Manuel López Obrador has reduced the amount of taxes the company owes the government three times, from 64% to 40%, the report adds. Pemex is buried in $113 billion in debt, the largest of any state oil company in the world, and continues to struggle to reverse more than 10 years of declining production, Bloomberg News reported. The oil producer, also known as Petróleos Mexicanos, depends on the federal government’s willingness to continue paying bondholders, the report adds. The Mexican government has moved forward with a comprehensive overhaul of the country’s energy sector, which is largely aimed at ending the reforms put in place by previous market-friendly administrations and helping position companies to state as dominant industry players.

By Energy Advisor for Latin America

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