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Released April 03, 2020 | SUGAR LAND
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Power
Brazil's suspension of federal power purchase agreement (PPA) tenders previously announced for 2020 is already affecting the development of many renewable projects, since their economic viability usually depends on a PPA to secure the sale of energy produced. Prior to the suspension, the next PPA tender had been scheduled for May. Although auctions are expected to be announced by the third quarter, investment decisions are being delayed until next year.
Pharmaceuticals
Pharmaceutical and biotech companies worldwide are generally being allowed to continue plant operations, and companies are changing their production to comply with preventative measures for COVID-19. Companies such as Aearo Technologies in Mexico, Industrias Medicas Sampedro in Colombia, Natura Cosmeticos in Brazil and Coure in Chile are working on projects to expand their production of necessary disinfectants and medical devices to keep up with rapidly increasing demand.
Food and Beverages / Pulp and Paper
COVID-19 has started to impact Mexico's Food & Beverage Industry. Earlier this week, Mexico's federal government declared a state of emergency, meaning only a few essential industries are allowed to continue operating.
As a result, Mexico's largest brewers, Grupo Modelo and Heineken, will have to cease operations at all facilities in Mexico by Sunday, April 5. Grupo Modelo announced it has a contingency plan to continue industrial operations, with 75% of its staff working from home in case the government re-evaluates its decision.
Most of Latin America's Food & Beverage and Pulp, Paper & Wood plants have not ceased operations. Nonetheless, investments in projects for both industries may be suspended for this year due to economic uncertainties.
Industrial Manufacturing
Airports: International airports in all Latin American countries are open, but are only receiving domestic flights.
Ports - Railways: All cargo-handled activities in Latin America--such as grains, containers, bulks and mining products--are operating normally. In South America, the Mercosur countries (Argentina, Brazil, Uruguay and Paraguay) have agreed to free transit of goods and services to support the regional economy during the COVID-19 pandemic.
In Mexico, all rail ports are operating normally.
Passengers railway and subway operations vary by country, but all are reducing the number of passengers.
Automotive Sector in Brazil: Brazil's top auto manufacturers have shut down their plants until the end of April: BMW, Caoa Chery, Fiat, General Motors, Honda, Merdeces-Benz, PSA Peugeot Citroen, Renault, Scania, Toyota, Volkswagen and Volvo.
Automotive Sector in Argentina: Automakers are opening their production lines to supply components and parts for manufacturers of artificial respirators. Their process-engineering teams are working to improve the production of related medical equipment and supplies.
Automotive Sector in Mexico: Ford will restart operations in Hermosillo, Sonora, on Monday, April 6, making it one of the first facilities to return to work. Most other North American automotive plants will continue to hold off on producing vehicles.
Meanwhile, Toyota delayed its restart of operation to April 17, while Honda will continue to suspend production until April 7. Mercedes-Benz Buses suspended operations at its plant in García, Nuevo León, from March 30 until April 22.
Alternative Fuels
According to recent research by Pecege, sugarcane-based ethanol production in Brazil is set to fall 24% during the 2020-21 harvest, when compared with the same period in 2019-20, due to COVID-19. This equates to an estimated total production of 25 billion liters, in comparison with the 33 billion produced during the last crushing season. Due to a global drop in fuel demand, hydrated ethanol accounts for much of the decreased production, while the production of anhydrous ethanol is largely tied to the market demand for gasoline.
Argentina's corn-based ethanol producers, such as ACA Bio, have turned to foreign markets like Brazil to offset a drop in domestic sales (recently estimated to be up to 80%). Brazil mandates a 27.5% ethanol component in its gasoline, whereas Argentina requires 12%. As such, ACA Bio has sold up to 8 million liters of fuel ethanol in Brazil. But not all such companies in Argentina are as fortunate, with the sugarcane-based ethanol producers in the country's northern areas halting their ethanol dehydration due to a lack of storage capacity.
Metals and Minerals
Mining activities in Mexico were suspended until April 30. Mines and equipment will be placed under care and maintenance during this period.
Exploration and field work are also suspended in Mexico. Projects under construction will be suspended in response to COVID-19.
Although Brazil's government has offered no clear measures, companies have started to suspend domestic mining activities.
Some mining companies in Peru have halted operations, while others are working at minimal capacity, such as Minsur and Southern Copper.
Refining
Venezuela:
Bolivia: The Bolivian hydrocarbon sector has been strongly affected by the current oil crisis. Until the market improves, state oil company YPFB is postponing the development of new wells and is maintaining Bolivia's current production rates to avoid shortages.
Argentina: Crude oil players have been forced to delay investments as they await an improvement in international crude oil prices. Pluspetrol cut the budget for its La Calera Field in Vaca Muerta and is delaying its capital approval, which had been planned for release in March or April.
Ecuador: Petroamazonas EP was forced to cancel scheduled biddings for BOOT companies (build, own, operate and transfer) for their 2020 Energy Efficiency Program until May due to COVID-19.
Meanwhile, large private sector players such as Petrorio S.A. (Brazil), Talos Energy LLC (Mexico) and Hokchi Energy (Mexico) decided to press forward on projects aimed at countering the drop in the price of crude oil. Petrorio is working to unify its Tubarao Martelo and Polvo fields to reduce production costs. Talos Energy LCC says it is preparing to approve development of the ZAMA block, which is awaiting a green light from Mexico's energy regulator. Hokchi Energy Sa de C.V. (a subsidiary of Pan American Energy) will begin production at its Hochi field in May, after it had been planned for November.
Chemical Processing
Argentina: Pampa Energia has reduced production 50% at its 34.17 million-pound-per-year ethylene and 85 million-pound-per-year ethylbenzene units at the Puerto General San Martin Plant.
Clorox Argentina is working at full capacity at its chlorine plant in Buenos Aires, Argentina, with maintenance and operational personnel on site to meet rapidly growing demand.
Transclor has postponed a planned maintenance turnaround and continues operating at normal rates, although only essential staff are on site.
Brazil: Braskem has reduced production 50% on its PP4 Unit at the Maua Plant and its 150 M million-pound-per-year PP5 Unit at the Duque de Caxias Plant.
Chem-Trend Brazil has delayed the implementation of upgrades at its lubricants plant in Valinhos.
Uruguay: Alliance Uruguay is operating at full capacity at its sodium hypochlorite plant in Canelones, Uruguay.
Mexico: Pemex Petroquimica has postponed the replacement of air compressors at its Methanol plant in San Martin Texmelucan until the third quarter of 2020. Final implementation dates have yet to be confirmed.
Brazil's suspension of federal power purchase agreement (PPA) tenders previously announced for 2020 is already affecting the development of many renewable projects, since their economic viability usually depends on a PPA to secure the sale of energy produced. Prior to the suspension, the next PPA tender had been scheduled for May. Although auctions are expected to be announced by the third quarter, investment decisions are being delayed until next year.
Pharmaceuticals
Pharmaceutical and biotech companies worldwide are generally being allowed to continue plant operations, and companies are changing their production to comply with preventative measures for COVID-19. Companies such as Aearo Technologies in Mexico, Industrias Medicas Sampedro in Colombia, Natura Cosmeticos in Brazil and Coure in Chile are working on projects to expand their production of necessary disinfectants and medical devices to keep up with rapidly increasing demand.
Food and Beverages / Pulp and Paper
COVID-19 has started to impact Mexico's Food & Beverage Industry. Earlier this week, Mexico's federal government declared a state of emergency, meaning only a few essential industries are allowed to continue operating.
As a result, Mexico's largest brewers, Grupo Modelo and Heineken, will have to cease operations at all facilities in Mexico by Sunday, April 5. Grupo Modelo announced it has a contingency plan to continue industrial operations, with 75% of its staff working from home in case the government re-evaluates its decision.
Most of Latin America's Food & Beverage and Pulp, Paper & Wood plants have not ceased operations. Nonetheless, investments in projects for both industries may be suspended for this year due to economic uncertainties.
Industrial Manufacturing
Airports: International airports in all Latin American countries are open, but are only receiving domestic flights.
Ports - Railways: All cargo-handled activities in Latin America--such as grains, containers, bulks and mining products--are operating normally. In South America, the Mercosur countries (Argentina, Brazil, Uruguay and Paraguay) have agreed to free transit of goods and services to support the regional economy during the COVID-19 pandemic.
In Mexico, all rail ports are operating normally.
Passengers railway and subway operations vary by country, but all are reducing the number of passengers.
Automotive Sector in Brazil: Brazil's top auto manufacturers have shut down their plants until the end of April: BMW, Caoa Chery, Fiat, General Motors, Honda, Merdeces-Benz, PSA Peugeot Citroen, Renault, Scania, Toyota, Volkswagen and Volvo.
Automotive Sector in Argentina: Automakers are opening their production lines to supply components and parts for manufacturers of artificial respirators. Their process-engineering teams are working to improve the production of related medical equipment and supplies.
Automotive Sector in Mexico: Ford will restart operations in Hermosillo, Sonora, on Monday, April 6, making it one of the first facilities to return to work. Most other North American automotive plants will continue to hold off on producing vehicles.
Meanwhile, Toyota delayed its restart of operation to April 17, while Honda will continue to suspend production until April 7. Mercedes-Benz Buses suspended operations at its plant in García, Nuevo León, from March 30 until April 22.
Alternative Fuels
According to recent research by Pecege, sugarcane-based ethanol production in Brazil is set to fall 24% during the 2020-21 harvest, when compared with the same period in 2019-20, due to COVID-19. This equates to an estimated total production of 25 billion liters, in comparison with the 33 billion produced during the last crushing season. Due to a global drop in fuel demand, hydrated ethanol accounts for much of the decreased production, while the production of anhydrous ethanol is largely tied to the market demand for gasoline.
Argentina's corn-based ethanol producers, such as ACA Bio, have turned to foreign markets like Brazil to offset a drop in domestic sales (recently estimated to be up to 80%). Brazil mandates a 27.5% ethanol component in its gasoline, whereas Argentina requires 12%. As such, ACA Bio has sold up to 8 million liters of fuel ethanol in Brazil. But not all such companies in Argentina are as fortunate, with the sugarcane-based ethanol producers in the country's northern areas halting their ethanol dehydration due to a lack of storage capacity.
Metals and Minerals
Mining activities in Mexico were suspended until April 30. Mines and equipment will be placed under care and maintenance during this period.
Exploration and field work are also suspended in Mexico. Projects under construction will be suspended in response to COVID-19.
Although Brazil's government has offered no clear measures, companies have started to suspend domestic mining activities.
Some mining companies in Peru have halted operations, while others are working at minimal capacity, such as Minsur and Southern Copper.
Refining
Venezuela:
- Cardon Refinery (295,000 BBL/d): The 30-day planned turnaround on the Crude 2, FCC, 51,000-barrel-per-day (BBL/d) Reformer, 58,000-BBL/d Naphtha Hydrotreater 2 and other processing units in the middle conversion area has been postponed until late 2020, due to financial constraints, a shortage of labor and concerns related to COVID-19.
- El Palito Refinery (140,000 BBL/d): The restart of its lone Crude, 71,000-BBL/d Vacuum, 70,000-BBL/d FCC, 18,000-BBL/d HF Alkylation and associated units was delayed from mid-April 2020 to early May 2020, due to financial constraints and measures taken to prevent the spread of COVID-19.
- Petrocedeno Crude Upgrader (240,000 BBL/d): The unit is processing at minimum rates due to financial restrictions, and ongoing planned repairs on the 50,000-BBL/d Delayed Coker, Diesel Hydrotreater (MDHDT1), Naphtha Hydrotreater (NDHDT2), Hydrocracker and associated processing units have been extended. The completion of the planned turnaround, previously set to occur by the end of March, has been delayed until late May.
- Campana Refinery (85,000 BBL/d): Axion Energy has suspended all activities related to the construction and operational startup of a planned expansion of the refinery, due to COVID-19 concerns. The facility continues to process at 60% to 70% capacity.
- La Plata (205,000 BBL/d): YPF SA postponed, for at least two to three months, all activities related to the construction of the 20,000-BBL/d Coker Naphtha Hydrotreater Unit (HTNC) and is maintaining 30% to 40% reduced production rates.
- Lujan de Cuyo (113,200 BBL/d) and Plaza Huincul (28,000 BBL/d): YPF S.A. maintains 40% reduced production rates, which it will continue evaluating as demand for petroleum products remains relatively low.
- Bahia Blanca (31,500 BBL/d): Trafigura Pte Limited has reduced production about 10%, citing lower demand, a storage capacity that is nearing its limit, and stricter port procedures that prevent Bahia Blanca's product from being exported.
- La Teja (50,000 BBL/d): ANCAP has reduced production about 10%.
- Santo Domingo (34,000 BBL/d): Refineria Dominicana de Petroleo S.A. has reduced production about 40%.
- ENAP Refinerias is operating at normal throughput at its 115,700-BBL/d Bio Bio and its 100,000-BBL/d Aconcagua Chile refineries, and expects to maintain normal operations as much as possible. The 28,600-BBL/d Gregorio Refinery remains offline since March 21, due to COVID-19 cases found among workers.
- Montreal Refinery (130,000 BBL/d): Suncor Energy has removed non-essential personnel and has reduced production about 20%.
Bolivia: The Bolivian hydrocarbon sector has been strongly affected by the current oil crisis. Until the market improves, state oil company YPFB is postponing the development of new wells and is maintaining Bolivia's current production rates to avoid shortages.
Argentina: Crude oil players have been forced to delay investments as they await an improvement in international crude oil prices. Pluspetrol cut the budget for its La Calera Field in Vaca Muerta and is delaying its capital approval, which had been planned for release in March or April.
Ecuador: Petroamazonas EP was forced to cancel scheduled biddings for BOOT companies (build, own, operate and transfer) for their 2020 Energy Efficiency Program until May due to COVID-19.
Meanwhile, large private sector players such as Petrorio S.A. (Brazil), Talos Energy LLC (Mexico) and Hokchi Energy (Mexico) decided to press forward on projects aimed at countering the drop in the price of crude oil. Petrorio is working to unify its Tubarao Martelo and Polvo fields to reduce production costs. Talos Energy LCC says it is preparing to approve development of the ZAMA block, which is awaiting a green light from Mexico's energy regulator. Hokchi Energy Sa de C.V. (a subsidiary of Pan American Energy) will begin production at its Hochi field in May, after it had been planned for November.
Chemical Processing
Argentina: Pampa Energia has reduced production 50% at its 34.17 million-pound-per-year ethylene and 85 million-pound-per-year ethylbenzene units at the Puerto General San Martin Plant.
Clorox Argentina is working at full capacity at its chlorine plant in Buenos Aires, Argentina, with maintenance and operational personnel on site to meet rapidly growing demand.
Transclor has postponed a planned maintenance turnaround and continues operating at normal rates, although only essential staff are on site.
Brazil: Braskem has reduced production 50% on its PP4 Unit at the Maua Plant and its 150 M million-pound-per-year PP5 Unit at the Duque de Caxias Plant.
Chem-Trend Brazil has delayed the implementation of upgrades at its lubricants plant in Valinhos.
Uruguay: Alliance Uruguay is operating at full capacity at its sodium hypochlorite plant in Canelones, Uruguay.
Mexico: Pemex Petroquimica has postponed the replacement of air compressors at its Methanol plant in San Martin Texmelucan until the third quarter of 2020. Final implementation dates have yet to be confirmed.
