Latam Energy Advisors: A Snapshot of Argentina’s Refineries

Latam Energy Advisors: A Snapshot of Argentina’s Refineries

Argentinian refined product supply does not satisfy all domestic fuel demand. As a result, Argentina imported roughly 90,000 b/d of total oil products, about half of which comes from the United States. Argentina has 11 refineries with a total refining capacity of about 640,000 barrels per day. YPF controls roughly half of the country’s refining capacity but other domestic players will have to expand to fill the supply shortfalls.

La Plata Refinery

YPF’s 189,000b/d La Plata refinery in Buenos Aires is the largest in Argentina. The refinery accounts for 30% of the country’s capacity and one-third of the country’s fuel consumption. The Continuous Catalytic Reforming Unit started operating in June 2013. This project cost roughly US$460 million and has improved product qualities and utilizations.

Buenos Aires Refinery

In April 2018, Brazil’s Raizen Combustiveis SA agreed to buy downstream assets in Argentina from Royal Dutch Shell PLC for US$950 million. Raízen Combustiveis, a 50/50 joint venture between Brazil´s Cosan and Shell, will have a 20% market share in fuel distribution in Argentina after acquiring a network of 645 gas stations in the country.

Raízen will be acquiring the refinery in Buenos Aires, LPG and aviation fuel terminals and a lubricant plant. These assets have combined annual revenue of US$3.3 billion. Raizen will continue their existing relationships with Shell through various commercial agreements worth roughly US$300 million.

We think the assets acquired in this transaction are high-quality assets with good safety and utilization, but we don’t think Raizen will achieve the same level of consistent production as in the past.

Campana Refinery

We are positive on the Campana Refinery owned by Axion Energy/Pan American Energy and we think the improved capacity and complexity will lower operating costs and improve revenues. We expect less downtime for maintenance and higher utilizations going forward. Please contact Kijana Mack, Senior Consultant for more information or to access the full report.

Kijana Mack, Senior Consultant