Direct diesel sales in Brazil surge after Petrobras–Vale deal, distributors push back

Direct sales of diesel by Brazilian producers to large consumers surged in the first quarter, after state-run oil firm Petrobras signed a contract with miner Vale, triggering a backlash from fuel distributors.

In letters sent to oil regulator ANP and seen by Reuters, distributors group Sindicom said direct fuel sales by producers generate competitive distortions.

The group represents distributors such as Vibra, Raizen and Ultrapar.

Sindicom argued that such producers, unlike distributors, are not required to purchase decarbonization credits, known as CBios, under the RenovaBio national program. Current legislation only requires distributors to buy them.

In a document seen by Reuters, ANP reported that direct sales of diesel B (blended with the mandatory biodiesel mix) by producers to large consumers totaled 22.39 million liters in the first quarter, from 1.1 million liters in the previous quarter.

ANP, asked to comment, confirmed the figures but said it does not disclose which producers made the sales for competition-related reasons. Petrobras is Brazil’s main diesel producer.

In January, Petrobras announced an agreement with Vale to supply diesel for the miner’s operations in the Minas Gerais state.

According to ANP, Minas Gerais accounted for 19.49 million liters of diesel purchased directly from producers between January and March, or nearly 90% of the total reported for the period.

“As producers are not obligated agents under RenovaBio, the direct sale of fossil fuels by these agents to large consumers takes place in an asymmetric manner compared with distributors,” Sindicom said in one of the letters sent to ANP.

Petrobras said it continually evaluates the possibility of carrying out direct sales to large consumers, always in compliance with current legislation. It did not confirm the volumes sold.

Vale said the diesel purchase deal with Petrobras is subject to confidentiality clauses. The miner also did not disclose purchased volumes.

Petrobras has been seeking to sell fuels directly to large consumers, according to previous statements by executives. The strategy would be a way to access a larger share of the market and move closer to end customers in a more profitable manner.

Executives from the state-run firm have said that the company lost direct contact with end consumers after it fully sold BR Distribuidora – now Vibra – in 2019.

(By Marta Nogueira and Fernando Cardoso; Editing by David Gregorio)