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Following an oil spill which affected more than 200 beaches
across the country, state-run oil company, Petrobras, has been hit
with another potential issue, general strike action. The strike
action is over the company's proposed annual wage hikes, which
stand lower than the expected annual inflation rate, the strike
could come less than a month before Brazil holds its biggest oil
auction yet.
This auction includes assets worth as much as USD 50 billion,
such as blocks previously explored by Petrobras, with estimates
suggesting that up to 15 billion barrels could still remain to be
explored. The winning bidders will have to arrange compensation for
Petrobras for having already explored part of this area. The
company expects to net anywhere from USD 25 to 45 billion. Oil
majors including Exxon Mobil and Shell have expressed their
interest.
Buzios, one of four prospects (together with Itapu, Sepia and
Atapu) at the heart of the pre-salt oil deposits, is already the
second-largest field by production in Brazil, with output having
surpassed 400,000 b/d, with four platforms already operating and at
least three more to follow.
According to IHS Markit Commodities at Sea,
shipments to China have remained close to 500,000 b/d, since the
country increased its storage capacity in South East Asia,
primarily Singapore, with the country having shipped almost 400,000
b/d to the region during the first 20 days of October. We expect
these flows to increase further, as Brazil will continue focusing
on Chinese demand, with strategic views to further expand its
storage capacity in South East Asia. Flows to the US have been
significantly lower so far this month, almost 50% down
month-on-month, but only marginally lower than August's levels. It
has been impressive how sharply flows to nearby importers across
Latin America have dropped this month, with Brazil having only
shipped 60,000 b/d so far, which will probably be a new record low
for this trade. Overall, shipments in October will end 5% lower
than a month ago, with flows on Suezmax and Aframax tankers deeply
falling, while VLCC loadings have surpassed 800,000 b/d once again
after July.
Posted 29 October 2019 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime, Trade & Supply Chain, S&P Global Market Intelligence
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