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Argentina's oil exports set to grow, but products imports will remain steady

Buenos Aires — Argentina's crude exports are expected to grow as oil production increases and local demand for refined products declines with widening use of electricity and natural gas, but premium product imports will remain steady until refiners make costly upgrades to meet specification requirements, a government official said Tuesday.

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"I don't think Argentina needs to grow in oil refining capacity," Carlos Casares, the country's deputy secretary of hydrocarbons and fuels, told S&P Global Platts on the sidelines of Engineering Week in Buenos Aires.

He said Argentina is meeting most of its demand with current production and refining capacity.

Argentina produces around 500,000 b/d of crude and has capacity to run about 560,000 b/d, according to Energy Secretariat data.

Demand for petroleum products has declined over the past year on a shrinking economy, leading refiners to run less crude. They used 76.6% of installed capacity in March, down from 78.6% in the same month a year earlier, according to data from Indec, the state statistics agency.

Casares said the long-term forecast is for a steady decline in consumption, led by increased use of renewables and gas for power generation, as well as a looming surge in the use of electric and gas-fired vehicles. Indeed, Buenos Aires is testing the use of the country's first electric buses, following the lead of Santiago, where more than 100 are in circulation.

Service stations are starting to install EV chargers to prepare for an expected increase in electric car sales. Indeed, Nissan plans to start selling its Leaf EV in July, Luis Perez Ettedgui, the company's marketing director in Argentina, said at the seminar.


While the long-term forecast is for a decline in fuel demand, Casares said there is room for investment in refinery upgrades in the near term to increase output of premium diesel and gasoline products, a chunk of which are imported.

The projects, he said, would allow refiners to meet stricter fuel specifications.

It makes sense to make upgrades to phase out imports, but not to build a new refinery or expand run rates, Casares said.

There have been calls for building a new refinery for years, and last week a number of lawmakers in the southern province of Chubut, the country's largest source of oil, said they would like one to be built in the south to supply that part of the country. That would make use of the oil produced in the region instead of shipping it to Buenos Aires and other refineries in the center of the country for processing and then bringing the finished products back.

Such a project, Casares said, would only work if the products were exported, given that domestic demand is already met, bar premium products.

But to export refined products, this would require billions of dollars of investment at a time when there is uncertainty that global demand will increase for fuels to make a return on the project. "I don't think this is going to happen," he said.

Instead, he thinks a steady increase in light crude production from Vaca Muerta, one of the world's largest shale plays, will go abroad. "It's all going to go for exports," he said.

The Energy Secretariat has said that it expects the country's oil production to double to 1 million b/d in 2023, making it possible to export 500,000 b/d by that year.

State-backed YPF, the country's largest oil producer, already has exported a first cargo of shale oil, and the country's energy secretary, Gustavo Lopetegui, has said that light crude exports will begin on a regular basis from the second half of this year.

-- Charles Newbery,

-- Edited by Valarie Jackson,