Brazilian liquids output ex-biofuels rose m/m by 91 thousand b/d to 2.77 mb/d in September, but this was down y/y for the second consecutive month (-13 thousand b/d). Maintenance and unplanned outages weighed across Q3 17, leaving liquids output flat y/y for the quarter—a significant deceleration from Q1 17 growth of 0.35 mb/d. September saw y/y output growth at Santos (+0.18 mb/d) broadly offset by declines at Campos (-0.17 mb/d) and onshore basins (-21 thousand b/d). Santos’ growth was due largely to growth from the Lula field, where output rose m/m by 0.12 mb/d as FPSO Cidade De Maricá and FPSO Cidade De Itaguaí returned from maintenance. We expect output at Lula, which at 0.8 mb/d is among the world’s largest fields, to continue ramping up for the rest of the year, as two wells are added at the P-66 platform. Partially offsetting this was an unplanned outage at FPSO Cidade De Caraguatatuba, which went offline in mid-September, cutting output to 25 thousand b/d. The field remains offline. In 2018, we expect crude output to rise y/y by 0.22 mb/d with pre-salt growth (+0.28 mb/d) offset by declines in the post-salt Campos (-44 thousand b/d) and onshore (-20 thousand b/d) basins.
Brazilian oil demand rose y/y for a fifth consecutive month, up by 16 thousand b/d to 2.46 mb/d. However, demand growth slowed as gasoline demand fell y/y for the first time since January 2016—down by 18 thousand b/d to 0.73 mb/d on rising retail prices. Meanwhile, buoyant industrial production, particularly in the north, continued to support diesel demand (+17 thousand b/d). Similarly, fuel oil demand rose by 26 thousand b/d y/y as low water levels capped hydroelectric power generation. Domestic refinery runs continued to recover in September, rising by 0.12 mb/d m/m to 1.82 mb/d on gains at the Reduc and Replan refineries.