Importação de diesel
Oil and Gas

Importers in Brazil wary of Russian diesel import claims

Jul, 12, 2022 Posted by Gabriel Malheiros

Week 202228

President Jair Bolsonaro said, on July 11, that the government of Brazil will try importing diesel from Russia within 60 days. Such a measure is an attempt to reduce fuel costs, given that the reduction of the ICMS – the Brazilian state excise tax – did not yield the same results as in the case of gasoline and ethanol. The tax levied by the states had already been lower as of this month than the 17% limit set for services considered essential.

The entity that represents fuel importers reacted, however, with skepticism to the president’s statement, noting that negotiations with Russia are surrounded by difficulties.

“It has been agreed already. In 60 days, consumers will start refueling their tanks with Russian diesel. This possibility exists,” said Bolsonaro during an interview at Palácio do Planalto. “We import almost 30% [of the diesel consumed in the country]. You have to import diesel from those selling it cheap and those who sell it more expensively.”

Now, with less than three months before the elections, the president has been putting extra pressure on Petrobras to avoid price increases. In addition to the direct impact on inflation, the rise in diesel costs affects one of the categories that most support Bolsonaro’s run to the presidency in 2018: truck drivers.

Referring to the new president of the state-owned company, Caio Mário Paes de Andrade, Bolsonaro demanded a price reduction in case oil quotations fell below US$ 100.

“Rising profits here boost Petrobras profits. The company now has a president that will observe if the state-owned is meeting its social purpose. Brent oil prices fell below US$ 100 and then increased a little. I believe if these prices remain constant below US$ 100, there will be leeway to lower the cost at refineries.”

While announcing that Brazil would import diesel from Russia, the president defended partnerships with the country and his decision to maintain a neutral stance after Russian leader Vladimir Putin invaded Ukraine, culminating in a war that has been ongoing for five months. Bolsonaro said that despite sanctions imposed by several countries on Moscow, the Russians continue to do business with partners around the world.

Notwithstanding, in the case of diesel, importers in Brazil do not see how Russia could quickly expand the diesel supply at a lower price.

Sergio Araújo, president of the Brazilian Association of Fuel Importers (Abicom), stated that its associated companies are not negotiating with Russian refiners. “The war has imposed many operational obstacles,” he said.

Araújo also commented that diesel was seldom imported from Russia, even before sanctions, due to issues such as bringing the supply over the Gulf of Mexico, freight costs, and lead times. “I don’t know how we can overcome the difficulties created by the sanctions,” summarized him.

Bolsonaro also spoke about the war and said he has a conversation scheduled with Ukraine’s president, Volodymyr Zelensky. He made the statement after an official visit by the President of Hungary, Katalin Novák. “We shared some thoughts about the conflict near Hungary, the Russia-Ukraine dispute. I told him that I had an agreed-upon phone call with Zelensky on the 18th, just as I had another chat with President Putin following my visit to Russia before the conflict,” commented Bolsonaro to journalists. “We want to do anything at our hands to sow peace. We know that the truth can be hard to hear sometimes, but there’s no other way.”

The president thanked Hungary for its support of the trade agreement between Mercosur and the European Union, as well as for the process of Brazil’s accession to the OECD. On his stint in Eastern Europe in February, days before the start of the war, Bolsonaro met with Hungary’s far-right prime minister, Viktor Órban, whom he called “brother.”

Source: Valor Econômico

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