By LUCIA KASSAI and NAOMI CHRISTIE
Latin American nations are poised to accelerate imports of US
refined-oil products after failing to build refineries to
meet demand from a growing middle class.
Freight traders booked tankers to send 19 million metric tons
of fuels from the US to Latin America in the spot market last
year, 5.4% more than in 2012, data compiled by
Bloomberg show. Volumes may rise again because
demand is expanding and no new regional refining capacity
will be added in the short term, according to Houston-based
Hart Energy Research & Consulting.
While growth in some Latin American economies slowed in 2013,
the region has outpaced the world for the past seven years,
helping lift more than 50 million people out of poverty. For
the first time there are more Latin Americans classified as
middle class than poor, according to a 2012 study by the
World Bank. Lower unemployment rates than the US since 2009
drove demand for energy products.
Demand in Latin America will keep expanding this year
amid a growing middle class, said Rodrigo Favela, an
executive director for refining
, planning and evaluation
at Hart Energy in Mexico City. I wouldnt be
surprised to see another year of record imports.
Latin American refiners, including state-controlled Petroleos
de Venezuela SA and Petroleo Brasileiro SA, doubled US
imports in the past five years amid delays in building new
refineries, Favela said. Their US counterparts are shipping
record volumes as oil companies pump the most crude in 25
Motor-fuel consumption in Latin America doubled from 1990 to
2011, according to the Paris-based International Energy
Agency. The last refinery
built in the region was
Refinor in Argentina in 1992, which can process 32,000 bpd,
adding less than 5% to the countrys combined refining
capacity of 630,575 bpd,
IEA data show.
The US, because of proximity and its cheaper feedstock
, is the natural export
market to the Latin American market, said Jonathan
Chappell, a shipping analyst with Evercore Partners, the New
York-based investment bank.
The largest US output of crude oil since 1988 coupled with a
ban on exports of unrefined products dating back to 1975,
prompted refiners to boost output and shipments of products
from gasoline to diesel.
US crude production expanded to a 25-year high of 8.16
million bpd in the week ended Jan. 10, according to the
governments Energy Information Administration. Exports
of gasoline, diesel and other refined fuels reached a record
3.58 million bpd in the four weeks ending Jan. 10, data from
the EIA show.
Drivers in the US paid on average $3.66/gal in the third
quarter, the 11th-cheapest gasoline in the world, data
compiled by Bloomberg from 61 nations show. Among
those with cheaper gasoline are some that subsidize it to
curb inflation, including Venezuela, the United Arab
Emirates, Mexico and Egypt.
Latin American economies will expand a combined 2.9% this
year, from 2.38% in 2013 and 2.85% in 2012, according to
economist estimates compiled by Bloomberg. Growth
was 5.46% in 2006, a year in which the global economy
expanded 4%. World growth will be 2.87% in 2014, compared
with 2.03% in 2013, the forecasts show.
The anticipated increase in fuel imports by Latin America
this year may not mean higher freight rates, said Court
Smith, the head of research at Poten & Partners, a
With poor demand coming out of Europe, owners may
relocate ships to the US Gulf and that would curb the
potential for a strong surge in freight rates, Smith
said from New York.
The average price to ship refined oil in 38,000 metric-ton
medium-range vessels from Houston to Rio de Janeiro rose 33%
to $16,574/day in 2013, compared with $12,422 the previous
year, according to data from London-based Clarkson, the
worlds largest shipbroker. The average for Houston to
Quintero in Chile rose 32% in 2013 to $17,231/day.
The proportion of product tankers in use in the global fleet,
also known as the utilization rate, rose 1.5 percentage
points to 85.5% in 2013, according to data from RS Platou,
the Oslo-based shipbroker.
Just from a volume perspective and from a utilization
of vessels standpoint, its been a welcome
surprise, Chappell of Evercore said of the rise in US
exports to Latin America. I dont think anyone was
building ships just for the purpose of moving that cargo. But
it has been providing employment opportunities and therefore
boosting global medium range tankers utilization.
While no ship owner is dependent on one particular route,
those in the medium-range tanker spot market, whose journeys
can vary by thousands of miles, may benefit most from rising
Latin American demand. These include Scorpio Tankers, Ardmore
Shipping, Navios Maritime Acquisition and Torm A/S, according
In the past decade, oil companies in Latin America chose to
invest in exploration
instead of more
capital intensive refining
Favela said. Its cheaper to import from the US than to
produce domestically, he said.
In Brazil, Latin Americas largest economy, Petrobras
plans to start the Abreu e Lima refinery
by the end of this year
after a three-year delay. Its Comperj refinery, initially
expected to start in 2013, wont open until next year.
Petroleos Mexicanos postponed plans to build the Tula
, CEO Emilio Lozoya said
Nov. 20, without saying when he plans to start construction
Latin Americas 12 main economies take about a third of
US petroleum product exports, government data show. Brazil,
Mexico, Argentina, Venezuela, Chile, Colombia, Ecuador, Peru,
Honduras, Guatemala, Costa Rica and the Dominican Republic
imported a combined 1.36 million bpd in the first ten months
of 2013, according to the latest available data, more than
double the 657,000 bpd in 2008.
New refineries from Petrobras that are starting in the fourth
quarter may not provide relief any time soon because the
regions economies are still expanding and it takes time
for plants to reach full capacity, Favela said.
Growth is still there, Favela said. The
region will remain as a good opportunity for US