Spain's Repsol is operating its 117,000 b/d La Pampilla refinery in Peru at one-third capacity in response to a collapse in fuel demand.
Luis Vasquez, Repsol's supply and retail director in Peru, said at an industry presentation late yesterday that demand in the country had fallen by 70pc since the government began a lockdown on 16 March.
While Peru's government will start easing the lockdown for 27 activities, including hydrocarbons, on 10 May, the country's top oil firms do not expect a quick rebound.
"We are completely saturated, not only with refined product but with crude, the raw material for the refinery," Vasquez said at a webinar organized by Peru's national mining and energy chamber. "We are full of expensive inventory, cannot store more product and have no one to sell to."
Repsol has not only cut throughput at La Pampilla, but is paying for floating storage because it has no onshore tanks available. Vasquez said the company has leased a tanker to store diesel. La Pampilla has capacity to store 2.25mn bl of crude, and 2.62mn bl of refined products.
He said Repsol not only needs to guarantee supply, but "manage this crisis in the most efficient way to address the stress we are under because of oversupply."
Carlos Barrientos, head of state-owned PetroPeru, said the company was dealing with the same problems of oversupply and replete storage.
"This has been the perfect storm of falling prices, falling demand and excess supply," he said.
PetroPeru's 12,000 b/d Iquitos refinery in the northern jungle is currently closed. Its 553,200 bl of storage is full.
The 15,500 b/d Conchan refinery in Lima was closed for most of March, but restarted in late April at 50pc capacity.
PetroPeru's 65,000 b/d Talara plant on the northern coast was shut down at the end of last year as part of a $5.4bn upgrade that will increase capacity to 95,000 b/d. Work on the project stopped with the lockdown, but Barrientos said the goal of completing the project in the first half of 2021 remains intact. Talara has storage capacity of 3.55mn bl.
He said PetroPeru had trimmed $80mn in operating costs and would forgo $250mn in investments because of the crisis.
PetroPeru announced on 1 May that it was shutting down its 100,000 b/d crude pipeline in the northern jungle. The companies that use the pipeline, Canada's Frontera and Argentina's Pluspetrol, have shut in production on their blocks.
"We hope to reactivate the line as soon as possible, but understand that this is not going to be immediate and we have a few hard months in front of us," Barrientos said.
According to an Argus analysis, Latin America's aging refinery fleet is currently running at about one-third of its aggregate design capacity of roughly 7.5mn b/d.
By Lucien Chauvin