ESAI Energy launches today a new multi-client study, Tipping the Scale, a forward-looking investigation of refined product markets in Latin America and the Caribbean (LAC) for the period through 2020. The report combines an in-depth analysis of developments in the region’s refining sectors with a detailed outlook of demand—ultimately providing a view on refined product balances in LAC that have become key variables determining the trajectories of global petroleum market prices and trade flows.

“Markets in Latin America and the Caribbean were short roughly 1.5 million b/d of refined products last year,” according to ESAI Energy analyst John Galante. “Demand growth and insufficient refinery investment over the past decade have made the region’s import markets a target for refiners and traders from the U.S. Gulf Coast, Europe and Asia.”

Looking forward, Tipping the Scale finds that LAC refiners will add some 620,000 b/d to regional refining capacity through the end of the decade. Leading the way are the upcoming start up of the 115,000 b/d first phase of Petrobras’ brand new RNEST refinery at Abreu e Lima, Brazil, and Ecopetrol’s 165,000 b/d replacement unit at Cartagena, Colombia. The study also provides information on upgrading and refurbishment projects at refineries around the LAC region, projects that are meant to improve utilization rates and boost clean-product yields.

Combining the supply side with a proprietary analysis of product demand growth, this study offers balances forecasts at the country level and for a set of closely integrated sub-regions, which include the Caribbean Basin, Atlantic South America , Pacific South America and Mexico.

“Latin America and the Caribbean is a large and diverse region in which these sub-regions have very different relationships with international markets,” says Galante. “A critical outcome of this study is the upcoming impact of the region’s trade balances—and the changes to those balances—on global markets. The region will not forever serve as a bottomless sink that can absorb surpluses elsewhere, and especially the growing export volumes coming out of the U.S. Gulf Coast.”

The study provides insight on diesel, gasoline, fuel oil, naphtha, LPG and jet fuel markets, and includes supply, demand and balance data broken down by fuel specification categories.
Source: ESAI Energy