The oil sector across Latin American countries is responding to the coronavirus pandemic. The number of COVID-19 cases in the region is lower than the US and Europe, but it continues to climb and the region has more limited infrastructures to combat the outbreak. Countries are tightening restraints to fight the diseases spread, but the measures affect the oil industry significantly.
Mexico imposed stay-at-home orders on March 27, the latest in the region. As a result, gasoline imports fell to the lowest level since June last year, energy ministry data showed. The imports fell to 442,000 in the week ended March 21, 23% lower than the prior week. Gasoline demand rose slightly to 797,000 bpd from 792,000 over the same period. Meanwhile stocks fell to 5.997 million barrels from 6.637 million bpd.
President Andres Lopez Obrador said the country would prioritize state energy company Pemex, granting it a 65 billion peso ($2.6 billion) tax cut as a support amid low oil prices and pandemic. The government also promised to deliver the long-awaited $13.5 billion package of public-private investments to support the country’s energy industry. Mexico generated 19% of government revenues from oil last year, falling from 39% in 2018.
Brazil’s Petrobras cut production target to 2.07 million bpd for April. It also reduced investments to $8.5 billion from $12 billion. The company will also rent floating storage while looking for buyers for its oil. Brazilian independent producer Petro Rio suspended 2020 investments of about $90 million. Meanwhile, another private producer Enauta said it would maintain its $196-million investment plans for 2020-2021.
The Argentinian government imposed obligatory quarantine on March 19, cutting oil product sales by 70%-80%. State-backed YPF, which supplies about 50% of Argentina’s diesel and gasoline needs, said it had cut rates at its three refineries to 30%-40%. Goldman Sachs forecast Argentina’s economy to contract by 5.4% in 2020.
Colombia’s state-owned Ecopetrol said it would cut spending to between $3.3 billion to $4.3 billion from planned $5 billion to $5.5 billion. Oil services group Campetrol said the pandemic and low prices would affect Colombia’s energy sector severely. It anticipated no more than $4.6 billion oil field investment this year, compared to its previous estimate of $6.2 billion.
Peru imposed a national lockdown on March 15, declaring a state of emergency and shutting its land, sea, and air borders. The country’s oil and gas producers have called for a government’s bailout plan amid plummeting oil prices. State-owned Petroperu shut its 65,000 bpd Talara refinery in February to expand the capacity to 95,000 bpd. The revamp is planned to last for a year. The company also plans to overhaul its 200,000 bpd North Peruvian Oil Pipeline.
Venezuela's oil sector has already struggled due to the US sanctions. President Nicolas Maduro issued a nationwide quarantine on March 16. The country has the largest dependence on oil revenues among other Latin American peers. To offset losses due to falling prices, state-owned PDVSA aims at increasing production so it can make more revenues from higher sales. PDVSA and partners raised output to 717,000 bpd in the first few days of this month, from 590,000 bpd in February.
