Brazil’s independent fuel retailers have consolidated their lead in the opening up of the country's downstream market by joining forces.
Port terminal leases are becoming increasingly strategic, as independent companies chip away at Petrobras' dominance in Brazil's downstream market.
The opening up of the downstream market has meant tougher competition for independent fuel distributors and access to infrastructure plays a key role in securing market share. Forming consortia to secure port terminals should allow smaller companies access to greater tankage capacity by splitting the cost.
Tanking capacity is concentrated in the Northeast and Southeast regions - A survey carried out by Argus in late 2019 pointed to the existence of at least 1,550 fuel tanks distributed in 27 ports across the country, capable of storing more than 39 million b of clean fuels. Over half - or 53.2pc - are for private use, with 14.9 million b in the hands of Transpetro, which corresponds to just over 38pc of the total market. Expansion investments are underway and should increase the country's total volume by about 10pc in the coming years.
Cargoes arriving in Brazil find in the Southeast region the greatest offer of tanking available, with capacity to receive 14.5 million b of fuels. However, this scenario should change in view of the investments in progress in terminals in the Northeast region, which should become the largest port of entry of fuels in the country once projected expansions to allow the region to receive 16 million b of fuels come online. The Northeast is already the leader in number of fuel terminals in operation, with 24 units, ahead of the Southeast, with 17.
Joining forces to remain competitive - BR, Raizen and Ipiranga - Brazil's top three distributors - secured three terminals in Cabedelo port in the northeastern state of Paraiba by joining forces. Navegantes Logistica, a consortium comprising the same three companies, placed the winning bid for a terminal in Vitoria port in southern Espirito Santo state. Latitude Consortium, formed by Raizen and Ipiranga, won the concession for one of the five terminals auctioned at the port complex in Belem, in the northern state of Para. Brazil's maritime regulator Antaq organized the auction.
The three companies gained these storage assets at a time when they are also ramping up fuel imports. Independent fuel distributors accounted for 84,500 b/d, or 11pc, of Brazil's total diesel wholesale sales between January and October 2019, up from 7.7pc of diesel wholesale sales totaling 50,500b/d in all of 2018, according to data from oil regulator ANP analyzed by Argus.
More liquid bulk terminals will be auctioned throughout 2020. Four liquid bulk terminals in Itaqui in the state of Maranhao are scheduled for tender in the second quarter of 2020. Brazil's infrastructure ministry is also carrying out a preliminary study to auction a terminal in the port of Santos in Sao Paulo state.