Rains hamper LPG distribution in south Brazil

Torrential rains that flooded southern Brazil's Rio Grande do Sul state decreased LPG distribution by 7-10pc in the region in the past week, market participants said.

Distributor Copa Energia's operations at its Canoas city unit — which is responsible for 30pc of the LPG distributed in the state — are expected to resume in the coming days after being shut last week.

The heavy rains since late April — that have left 100 people dead, 128 people missing and almost 164,000 displaced from their homes, according to the state's civil defense — have spurred companies to take measures to maintain gas supply in the region. Some firms have also advanced salary benefits to help workers deal with the crisis.

State-controlled Petrobras' 201,000 b/d Alberto Pasqualini (Refap) refinery has cut LPG production, but has not disclosed by how much. The unit also produces diesel, gasoline and fuel oil, among other products.

LPG distribution began normalizing earlier this week, after "the feeling of chaos and lack of information" over the weekend had passed, according to an industry executive. Many retailers are now able to retrieve products, but it is still unknown how many routes have been compromised.

But LPG stocks have been able to meet demand so far, preventing any shortages.

Hydrocarbons regulator ANP's measure to allow collaborative actions among sector companies without the usual bureaucratic procedures to keep the market supplied has had an immediate effect, according to LPG association Sindigas' chief executive Sergio Bandeira de Mello.

Distribution has been carried out collaboratively in recent days, despite some retailers' facilities being underwater, vehicles being lost and roads destroyed. But the state will still face months of problems and precariousness, de Mello said.

By Betina Moura