Brazilian November liquids production fell by 34 thousand b/d y/y to 2.67 mb/d, the seventh consecutive month of y/y declines. Crude production is likely to have ended 2018 down y/y by almost 50 thousand b/d, despite the initial euphoria of around 1 mb/d of expected capacity additions across 2018 (actual additions were 0.59 mb/d). The weakness in November was once again the result of maintenance, with FPSO Cidade de Ilhabela and Mero in the pre-salt, and P-18 and P-37 platforms in the post-salt Campos basin going offline. For 2019, we forecast 0.3 mb/d y/y growth on expectations of lower maintenance as well as a slight easing in decline rates, which peaked at 19% in the Campos basin last year. 2019 new capacity additions are pegged at 0.65 mb/d, which will be supplemented by the ramp-up of capacity in 2018. Indeed, November saw the start-up of the P-75 platform, which helped total Buzios output rise to 84 thousand b/d.
Brazil’s oil demand increased by 41 thousand b/d y/y to 2.4 mb/d in November as distillate demand rose by 20 thousand b/d y/y to 1.0 mb/d. Gasoline demand fell by 73 thousand b/d y/y to 0.65 mb/d, while ethanol demand rose by 0.13 mb/d y/y to 0.41 mb/d. Refinery runs fell by 86 thousand b/d y/y to 1.7 mb/d as Petrobras has been unable to return the Replan refinery to normal operations after an explosion on 20 August. Crude throughput at the Replan refinery was reported at 0.21 mb/d, some 0.15 mb/d less than was recorded before the accident. Petrobras has restarted the coker unit at the Rnest refinery, which was involved in a fire on 4 December. Distillate imports fell by 76 thousand b/d y/y despite increasing demand and reduced crude throughput. Distillate subsidies and a lack of gasoline demand pushed refiners to max distillate mode, as distillate yields increased some 4.5 ppts y/y to 44%.