Brazil regulator reinstates public submission of biodiesel term contracts

The Brazilian regulatory Agency of Petroleum, Gas and Biofuels, or ANP, announced late Oct. 19 that it will reinstate the electronic system of information, or SEI, which tracks biodiesel volumes settled under term contracts.

According to the ANP statement, producers and distributors who have settled term contracts to supply the domestic market with biodiesel in November and December will need to submit them by Oct. 25 -- giving them just three working days.

In an earlier regulation from the ANP, released Oct. 28, 2021, the agency required producers and distributors to submit all their term contracts five days prior to the beginning of the next term contract cycle. But the electronic system via which the producers and distributors submitted their contracts was suspended on Aug. 23, 2022, after a cyber attack, and the ANP suspended submission of the September and October contracts.

"ANP had initially said that it would inform us about the SEI reinstatement with safety period in advance. However, giving us just three working days to the deadline is not feasible," said a source from one of one of Brazil's largest fuel distributors.

From January 2022, the Brazilian biodiesel trading system has shifted from an auction model to a combination of term contracts and spot market sales. In the new model, producers and distributors need to settle 80% of the volume that had been traded in the same year-ago period based on contracts and submit it to the regulatory agency.

For the November-December period, distributors need to fulfill 787,387 cu m -- which is 80% of the total volume that had been traded over November-December 2021. Of this total, 521,456 cu m, or 66%, needs to be supplied by the three major distributor companies in Brazil. This has led to a rush as the companies need to submit their contracts to ANP by the deadline of Oct. 25.

Producers, meanwhile, need to supply 810,375 cu m -- and that volume would be split between 26 companies. The five largest producer companies, however, will need to supply 50% of that total, suggesting that these five companies will also feel the pressure of the deadline.

ANP in its Oct. 19 announcement did not include any information about the need to submit the term contracts for the September-October period, which was suspended after the cyber attack.

"We already asked through our association to have a clarification about the prior cycle contracts and also about the production and sales volumes," said a Brazilian producer who added that the production and sales numbers were not expected till early November.