Cabinet Chief Juan Manzur reported shortages of diesel fuel in eight provinces last Wednesday and promised more imports to redress the shortfalls. The provinces of Jujuy, Salta, Formosa, Tucumán, Misiones, Corrientes, Santa Fe and Entre Ríos have reported little or no fuel in their service stations after supplies have been falling off over the last two months. Manzur´s statements came on the same day gas and electricity bills were hiked by 20 percent.
Amid Argentina’s harvest season diesel shortage, biofuels law branded ‘a serious mistake’
Argentina’s biodiesel industry – impacted by a period of price freezes and a controversial law slashing the percentage in the finished diesel mix – could help ease a fuel crisis gripping the country.
A confluence of factors, both domestic and international, has resulted in diesel price increases at some gas stations as well as shortages, sparking a grain transporter strike this week and hampering critical soy bean-harvesting operations.
Another factor is a government policy shift away from biodiesel and a temporary biodiesel price freeze which dampened local producer appetite. A biofuel law introduced by the current administration last year reduces the percentage of biodiesel in the finished diesel mix to 5%, down from 10% originally – and opens the door for deeper cuts. An objective of the cash-strapped government was maximizing grain exports to boost revenue obtained from duties.
Verónica Geese, former energy secretary of Santa Fe province and a driving force behind a public-private lobby formed in 2018 to support the biofuel industry, told BNamericas that both large producers geared to the export market and SMEs could play a vital role. About 60% of productive capacity of Argentina’s large grain-processing companies is idle. Heavy US import tariffs on Argentine biodiesel has dented the local industry.
“Installed capacity is there,” said Geese, who urged the government to build energy resilience via diversification and proposed an easing of biodiesel usage limits as a way to help ease the current crisis.
“The big companies can ramp up production in under two weeks. Even though they have some idle capacity, they are still functioning. It’s not like they have been shuttered for years.”
SMEs that exclusively serve the local market and are supplied with feedstock by major players could also boost production.
Standard passenger vehicles can readily run on diesel containing up to 15% biodiesel while some farm machinery, public transport vehicles and heavy goods vehicles can run on pure biodiesel, said Geese.
“The impact of an increase to 10% or 15% would be almost instantaneous,” said Geese, who now works as an energy, sustainability and governance consultant.
Argentina’s grain exports generate a key flow of dollars for the government, currency needed to purchase critical imports like LNG during the winter months.
“When they were about to sanction this [biofuels] law, we said they were making a mistake; and today we see that it was indeed a serious mistake,” Geese said.
The government, however, had branded the law a promotional regime. In response to the diesel crisis, in addition to updating biodiesel prices to help encourage production, the federal government established a working group with oil and biodiesel firms. An associated strategy involved asking hydrocarbons firms to voluntarily devise a solution among themselves to increase local crude supply. National oil company YPF – which operates in the upstream, midstream and downstream sectors – said it would ramp up supply of local and imported diesel.
Argentine refiners import some products, including diesel, to meet local demand. The country lacks capacity to produce and refine sufficient quantities of heavy crude.
Robust prices on the international market and supply constraints, combined with a reluctance of local sector players to trim lucrative oil exports and to import crude – because of the losses they incur today on account of local pump price restrictions – have conspired.
SOURCE: www.bnamericas.com
Argentina’s grain transporters call for strike
BUENOS AIRES, April 4 (Reuters) – Leaders from Argentina’s major transportation union said on Monday they will call for a national strike to demand an increase in grain freight rates, as higher fuel costs cause tensions throughout the industry.
The national transport federation (Fe.Tr.A) is demanding the government increase the tariffs on grain producers to reflect the higher costs for fuel, which has been affected by galloping inflation.
“In order to avoid further damage to the economy of its members, (Fe.Tr.A) calls for a national stoppage of activities from Monday, April 11 at 00.00 hours (0300 GMT) until an answer is found,” the federation said in a statement.
Around 86% of soybean transportation to Argentina’s ports is carried out by trucks, 13% by trains and the remaining 1% by ships.
Agricultural producers in the South American country have expressed their concern about the lack of fuel in different production areas, at a time of the seasonal harvest of soybean and corn, the two main crops of the major global grains exporter.
Besides that, Argentina’s main rural associations have previously warned about the lack of fuel in the current context of international shortage of diesel oil and a sharp reduction in the global food supply due to the conflict between Ukraine and Russia.
The second quarter of the year is the time when the bulk of soybeans and corn are harvested, which last year recorded exports of close to $30.5 billion, including soy oil and meal shipments.
SOURCE: www.reuters.com