By Lais Carregosa
Petrobras dominates the fuel market, with a 79.9% share of the diesel supply to distributors and 74.5% of gasoline, according to data from the ANP (National Agency of Petroleum, Natural Gas and Biofuels) compiled by Poder360.
Even so, imports are a relevant part of the market, whose dynamics should be altered by Petrobras’ new pricing strategy.
According to ANP data, by March 2023, imports represented 25.5% of the diesel market.
With the new policy, Petrobras will be responsible for ensuring national supply, says Marcus D’Elia, partner at Leggio Consultoria (Photo internet reproduction)
In turn, the external dependence on gasoline and LPG (liquefied petroleum gas) is 12.6% and 18.5%.
On Tuesday (16), Petrobras announced the end of the PPI (Import Parity Price), which matched the prices practiced in the domestic market to the value of imported fuels.
The policy was adopted in October 2016 and favored import activity since these agents gained competitiveness concerning the state-owned company.
The new strategy should prioritize the customer’s alternative cost, i.e., the price that should be charged for Petrobras to be more competitive when negotiating with distributors.
It will also consider the “opportunity cost” of the state-owned company.
But the price of oil on the international market should still guide prices, said the president of Petrobras, Jean Paul Prates.
For the partner of Leggio Consultoria, Marcus D’Elia, if Petrobras practices prices below the PPI, the distributors should purchase from the state-owned company as a priority supplier.
“It is not that there won’t be imports; it is a relevant volume, it will continue, and it will continue to be sold at PPI.”
“It’s just that the distributors will buy only what is necessary,” he declared.
D’Elia says Petrobras will have more responsibility for the national supply since the import activity will become less attractive.
“The distributor will try to get this number [sufficient for demand] right, but if there is any unforeseen variation in relevant consumption, the responsibility for guaranteeing the supply of the product will turn to Petrobras, as it was in the past,” said the specialist.
In the assessment of Ineep (Institute for Strategic Studies of Petroleum, Natural Gas and Biofuels) researcher Carla Ferreira, the impacts are unclear because it will be a new market dynamic.
Between the implementation of the PPI six years ago and its end, the market gained new agents in imports and refining.
“There may be regional impacts, so we must follow the market.”
“It could be that smaller importers, for example, may not be able to establish stocks or something of the sort to meet this market with this new dynamic of prices,” she said.
The researcher also says that Petrobras can increase its market share in refining with the increase in the capacity of its refineries.
“In any case, [the market] won’t be able to be supplied by Petrobras because, despite being the smallest part, the demand for imports is high,” Ferreira said.
There are also the limits to Petrobras’ refining margin, says D’Elia.
According to him, the state-owned company could not practice prices much below the PPI since this factor would vary from 3% to 10% depending on the unit.
“The refining margin is influenced by the price of refined [product] and the price of oil, which is the main input of the refinery,” he said.
This means the state-owned company would have no room to reduce the fuel price in marketing to distributors without compromising its results.
COMPETITIVENESS
The Mataripe refinery of Acelen in Bahia is the private unit with the biggest market share in Brazil.
It was the first unit privatized by Petrobras, in 2021, according to an agreement signed with the Cade (Administrative Council for Economic Defense).
According to D’Elia, private refineries may remain competitive with Petrobras, even if the state-owned company practices lower prices.
This is because units such as Mataripe and Ream (Manaus Refinery) – both privatized by Petrobras – were built to serve regional markets.
“The area of influence of these refineries is quite protected, let’s say, by the distance between refineries in Brazil.”
“They were already designed to serve distinct regions. They were not designed to compete.”
“So, it is very difficult to take an area of influence or threaten the area of influence of a refinery,” he said.
However, according to the Ineep researcher, it is still unclear how Petrobras should use the “regionalization” criterion for its prices.
The president of Petrobras, Jean Paul Prates, said that the state-owned company would adopt prices according to its customers in each region.
“It is something that we need to follow. It is a novelty of regionalization of prices because until then, the prices were national.”
“It has to do with this dynamic that there is a private refinery in Bahia, another one in Manaus, there are points where importers are stronger and others where Petrobras is dominant. It is an insertion that will take place in each pole,” he said.
BY CLIENT
Prates said, on Tuesday (16), that the prices charged by Petrobras should vary according to the location of the refinery, the logistics for internalizing the product, and the type of customer.
“Not only do the prices in the areas of influence [of each hub] vary, but from customer to customer, they must also vary.”
“The customer who buys a lot is different from the customer who buys a little, the customer who orders from a remote delivery point is different from the more collective delivery point, the customer who is a contumacious bad payer is different from the one who is a good payer,” said the president of Petrobras.
According to D’Elia, the differentiation of values by customers can lead to greater market concentration in distribution.
The specialist said Petrobras’ contracts with distributors have as one of their principles the “isonomy of price in the pole”, i.e., the price would be the same for all customers in a given pole of fuel sales.
“If I, for example, put a lower price for a distributor that buys large volumes and a higher price for those who buy small volumes, there will quickly be a concentration,” D’Elia said.
“This is because the prices should discourage regional distributors, who deal in smaller volumes.
With information from Poder360
News Brazil, English news Brazil, Brazilian economy, Petrobras