RIO DE JANEIRO (Dow Jones)--Argentina, once a major oil exporter to Brazil, has virtually stopped supplying its neighbor with crude as its oil production dwindles while domestic consumption is rising, Brazil's Valor newspaper said Thursday.
While Argentina in 2002 still provided 16.6% of Brazil's oil-import needs, in 2005 it supplied only 1.2%, and almost none in the first nine months of 2006, the newspaper said, citing Brazil's Industry and Trade Ministry.
Brazil is on the eve of becoming self-sufficient in oil and oil products. But the country still needs to import light oil for the production of high- quality fuels, while it exports heavy crude.
Argentina currently produces about 600,000 b/d of oil, yet its exports of about 100,000 b/d also are mostly of heavy crude, Paulo Roberto Costa, Downstream Director at Brazil's state-run oil firm Petroleo Brasileiro SA (PBR), or Petrobras, is quoted as saying in Valor.
"Argentina exports a petroleum we have in abundance, with a high degree of viscosity - equal to that of (Brazil's) Albacora field," Costa said.
Argentina's oil reserves have declined as exploration activities have have decreased. By 2010, the country will become a net oil importer, according to Caio Carvalhaes, an oil analyst with Cambridge Energy Resources Associates, Valor said.
Brazil, meanwhile, substitutes Argentina's oil imports with Middle Eastern and African crude. Currently, 40% of Brazilian oil imports come from Nigeria, and another 30% from Algeria, with Saudi Arabia and Iraq supplying most of the remainder.
As Petrobras is revamping several of its refineries to process more Brazilian heavy crude, and at the same time is stepping up its own light oil production, the need for light oil imports will all but end by 2010, Costa said.
Petrobras' Brazilian oil output reached 1.788 million b/d in September. On Monday, the company's domestic production hit a record of 1.913 million b/d, already above Brazil's current estimated oil-product consumption of 1.85 million b/d.
By year-end, the company expects to surpass the 2 million b/d mark in its domestic output.
Source: Bernd Radowitz, Dow Jones Newswires; +55-21-3288-5004; bernd.radowitz@dowjones.com;