Brazil ports face tight MGO, LSMGO supply amid export tax

Brazil's state-owned bunker supplier Petrobras clarifies tax structure as buyers continue purchases despite higher prices; availability tightens at some Brazilian ports.

IMAGE: Containers transported across the Rio–Niterói Bridge in Brazil. Getty Images.

After temporarily halting export sales of marine gasoil (MGO) and low-sulphur marine gasoil (LSMGO) earlier this month, Petrobras has resumed the sale of both grades, a source informed on the matter tells ENGINE.

The halt came amidst the Brazilian government’s new legislation, imposing a 50% export tax on diesel oil.

The export taxes are still in place and Petrobras clarified this tax is levied on the total value of the invoice, and not only on the value of the product.

The company explained that, for a desired net remuneration of $1000 per tonne, the value of the note, the tax should be $2000 per ton, so that 50% corresponds to the tax due and 50% to Petrobras' net revenue.

"It seems that, given the international availability, some buyers (though not all) are still willing to purchase despite the higher prices", a bunker trader informed ENGINE.

Additionally, the implication of the tax has resulted in some ports across Brazil, specifically Rio Grande and Parangua, experiencing tight availability with extended lead times.

However, the trader mentioned "it is still possible to buy" both grades at the port, albeit with longer lead times.

This tax, however, does not have any impact on sales of VLSFO, the company said in a client’s note last week.

By Gautamee Hazarika

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