Latin American nations are poised to accelerate imports of U.S. refined-oil products after failing to build refineries to meet demand from a growing middle class.
Freight traders booked tankers to send 19 million metric tons of fuels from the United States to Latin America in the spot market in 2013, 5.4 percent more than the previous year. Volumes may rise again because demand is expanding and no new regional refining capacity will be added in the short term.
While growth in some Latin American economies slowed in 2013, the region has outpaced the world for the past seven years, helping lift more than 50 million people out of poverty. For the first time, more Latin Americans are classified as middle class than poor, according to the World Bank. Lower unemployment rates than the United States since 2009 drove demand for energy products.
“Demand in Latin America will keep expanding this year amid a growing middle class,” said Rodrigo Favela, an executive director for refining and evaluation at Hart Energy Research & Consulting in Mexico City. “I wouldn’t be surprised to see another year of record imports.”
Latin American refiners, including state-controlled Petroleos de Venezuela SA and Petroleo Brasileiro SA, doubled U.S. imports in the past five years amid delays in building new refineries, Favela said. Their U.S. counterparts are shipping record volumes as oil companies pump the most crude in 25 years.
Motor-fuel consumption in Latin America doubled from 1990 to 2011. The last refinery built in the region was Refinor in Argentina in 1992, which can process 32,000 barrels a day, adding less than 5 percent to the country’s combined refining capacity of 630,575 barrels a day.
“The U.S., because of proximity and its cheaper feedstock, is the natural export market to the Latin American market,” said Jonathan Chappell, a shipping analyst with Evercore Partners, the New York-based investment bank.
The largest U.S. output of crude oil since 1988, coupled with a ban on exports of unrefined products dating back to 1975, prompted refiners to boost output and shipments of products from gasoline to diesel.