* Move seen freeing up cash for oil output investment
* Petrobras finds way around fuel-price freeze -analyst
* Distributors spend $1 bln/yr on tank-farms, logistics
By Jeb Blount and Leila Coimbra
RIO DE JANEIRO, Dec 11 (Reuters) – Brazil’s state-led oil
company Petrobras is pushing fuel distributors to
increase stocks of gasoline, diesel and other refined products
in an effort to free up investment capital by shifting costs to
clients and consumers, an association representing distributors
said Tuesday.
To this end, Petrobras, Brazil’s only refiner, doubled the
minimum time between fuel-tanker deliveries at terminals on
Brazil’s coast to about two weeks, effective Sept 1, said Alisio
Vaz, president of the association known as Sindicom. If supply
is needed earlier, distributors pay extra.
With demand for fuel in the world’s No. 6 economy growing at
more than 6 percent a year, fewer deliveries mean distributors
must accumulate bigger stocks and build the tank farms to hold
them, Vaz said. Sindicom members will spend $1 billion this year
and another $1 billion in 2013 on infrastructure, the bulk of it
on tanking.
With a reduced need to expand its own storage, Petrobras’
savings are freed up to invest in oil production. It also lets
the Rio de Janeiro-based company get around the government’s
refusal let it raise wholesale fuel prices in line with world
benchmarks.
“Unable to raise the price it charges distributors for fuel,
it passes on its costs instead,” said Oswaldo Telles, oil
analyst at the Sao Paulo office of Portugal’s Espirito Santo
Investment Bank. “The distributors, who are free to increase
what they charge, either pass the cost to consumers at the pump
or swallow a cut in their own profit.”
Petrobras’ refining and supply unit, which deals directly
with the distributors, has lost more than $8 billion so far this
year. Rising costs and falling oil production also led to a
company-wide loss in the second quarter, the company’s first in
13 years.
This has made it harder for Petrobras to finance its $237
billion five-year investment plan, the world’s largest corporate
spending program.
Borrowing jumped to $25 billion this year, 56 percent more
than the average annual amount expected in the spending plan.
About $5 billion of that was for short-term operating capital
and trade operations, some directed to the import of fuels as
Petrobras’ refineries fail to keep up with demand, Petrobras
told Reuters Monday.
Petrobras did not immediately respond to requests for
comment on the changes in fuel distribution strategy.
Sindicom represents 12 fuel and lubricant blenders and
distributors that own 19,800 filling stations and account for
about 80 percent of the fuels market in Brazil, Latin America’s
largest economy.
Members include Raizen, a joint venture between Royal Dutch
Shell Plc and Brazil’s Cosan SA, the world’s largest
sugar and ethanol producer, as well as Brazil’s Ale and
Ipiranga.
The organization, though, which includes BR Distribuidora,
Petrobras’ fuels distribution unit, has not openly criticized
the move by Petrobras to unload its costs on Sindicom members.
While free to import fuels from any source, Petrobras’
government-controlled, below-world-market wholesale gasoline and
diesel prices give it a de facto monopoly in Brazil’s wholesale
fuels market. Sindicom last imported fuel in 2009, Vaz said.
“While we, the larger distributors, can see long-term
advantages in this policy, this is a Petrobras initiative, we
didn’t ask for it,” Vaz said. “It may help us increase our
market share.”
With fuel demand growing at rates of about 20 percent in
some of the fast-growing states on Brazil’s northeast coast,
bigger fuel stocks would allow fuels distributors to better
respond to rising demand and could have helped avoid some minor
shortages earlier this year.
While some individual gas stations ran out of fuel this
year, no major city or region was left without fuel, though the
margin of safety is falling, Vaz said.
The challenge facing distributors as Petrobras forces them
to take on costs is more related to the timing of when storage
facilities will be built and where to build them.
“We won’t have any problem financing this,” Vaz said. “Our
problems are more with permits and finding the proper location
for our new tanks.”
