Brazil projected to need US$23bn to assure fuel supplies until 2035

Bnamericas Published: Wednesday, August 03, 2022
Brazil projected to need US$23bn to assure fuel supplies until 2035

Brazil is projected to require 120bn reais (US$23bn) in investments by 2035 to assure nationwide fuel and biofuel supplies, according to a study by local petroleum institute IBP in partnership with Leggio Consultoria and shared with BNamericas. 

The base case scenario suggests an investment in direct infrastructure – including ports and pipelines – of 8.8bn reais, which would enable a reduction in fuel distribution costs of 2bn reais per year. 

In addition, the study points to the need for multisector investments of around 109bn reais in railroads.

"These results reinforce the attractiveness that investments in the sector can bring, as well as the urgency to start these investments, since the segment already presents infrastructure bottlenecks," the study highlighted.  

Besides the financial benefits, potential environmental upsides were outlined with the infrastructure investments. The migration of flows from road to high-volume alternatives (waterways, railways, pipelines and cabotage) represents not only a reduction in supply costs, but also a decrease in CO2 emissions in fuel transportation estimated at 15%. 


The study concluded that, after the sale of the refineries included in federal oil company Petrobras’ divestment program (RLAM, Regap, Repar, Refap, Reman and Rnest) – which represent 50% of Brazil’s refining capacity – imports will be responsible for filling the gaps in most of the country’s supply chains. 

Furthermore, some refineries will compete in Brazilian regions in a complete divestment scenario, such as competition between RLAM in Bahia state and Rnest in Pernambuco. 

Rnest, through its surplus of S10 low sulfur diesel, would be better positioned to supply municipalities in the Bahia chain with this product, while RLAM, with its surplus of S500 diesel and gasoline, could compete in the Pernambuco chain.

Another chain where investments are directly affected by the scenario of refinery sales is in Paraná, which shows a strong deficit of products for the diesel and Otto cycles. 

If a new refiner is confirmed in this chain, a defensive investment scenario in relation to demand in its area of influence is outlined, projecting investments that increase its product internalization capacity (own pipelines and terminals in São Francisco do Sul). 

In the alternative scenario, where Petrobras continues to operate Repar, it was assumed that investments would be made in infrastructure that complement the chain's volumes, such as expansion of the import terminals in Paranaguá.

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