Brazil urged to diversify diesel supply

Brazil should establish alternative supply chains for diesel in order to reduce the risks of fuel shortages, according to the partner-director of Leggio Consultoria, Marcus D'Élia.

The country imports about 30% of the diesel it consumes, and 60% of this external supply, comes from the US. Alternative supply could come from the Persian Gulf and India.

"For this action to be facilitated, it would be important for the federal government to act through formal channels, since exporters such as China and India are adopting measures to limit the volumes exported," D'Elia said in a statement.

He added that other measures remain available, such as mapping critical points and developing contingency plans for continuity of supply. 

On August 5, oil and gas watchdog ANP rejected the proposal that would have required companies in the sector to increase stocks of S10 diesel (with 10 particles of sulfur per million), a decision D'Élia considered correct. 

"This action would hardly be effective due to the expected reduction in exports from major global diesel producers such as China and India," he said. 

Oil and gas think tank IBP also applauded ANP's decision, considering that increasing stocks would be costly to the system and inefficient to guarantee supply.  

"Faced with a challenging international scenario in recent months, the agents have demonstrated responsibility for supply and commitment to their contracts, without shortages or interruptions, having increased their stocks above the minimum levels provided for by regulation, without any command in this direction," the entity said in a statement.  

ANP keeps monitoring supply of S10 diesel by requiring market agents to inform about the volumes in the country, volumes contracted abroad and any facts that could negatively impact production or import.