Shell International Petroleum Co. Ltd. has separate operating companies each in Chile, Argentina, and Brazil, reflecting the different national markets.
CHILE
Shell Chile SA holds 16.5% of Chile's oil products market. Free market policies and encouragement of foreign investment led the company to diversify into mining for gold, copper and minerals, and wood pulp manufacture.
Forestry entered the portfolio in 1988, when Shell took 60% in Forestal e Industrial Santa Fe SA, formed to take over a halted 231,000 metric ton/year eucalyptus pulp project. The plant is now producing at design capacity, and the company is scheduled to be self-sufficient in raw materials by 1997.
Santa Fe has 91,000 plantable acres on which it is growing the feedstock. Eucalyptus globulus, the main variety of tree in production, can reach 75 ft tall in 8-10 years, with proper nourishment and weed control.
ARGENTINA
Argentina is rapidly privatizing its state companies, including state oil company Yacimientos Petroliferos Fiscales (OGJ, Dec. 7, p. 27).
Shell Cia. Argentina de Petroleo SA (Capsa) owns and operates a 91,000 b/d refinery near Buenos Aires. Capsa is investing $30 million to modernize its 2,300 b/d lubricants blending plant in Buenos Aires, and it operates five marine vessels totalling 78,000 dwt and about 1,000 retail outlets.
But Capsa has met with little success in the Argentine upstream sector. During 1989-92, it spent $28 million on exploration without a notable discovery. Now it hopes to acquire farmouts on existing exploration projects.
Capsa's long term aim is to supply 60% of its refinery's needs from its own production. In the meantime, it is studying all the offerings in the YPF sale. Capsa also plans to invest $300 million for upgrades to improve margins and environmental and safety measures at the refinery.
BRAZIL
Shell Brasil SA is constrained by the most difficult market conditions of the three.
It is involved in oil, chemicals, metals, and forestry. It has 4,500 filling stations-the largest private network in the country. Its lubricants factory near Rio de Janeiro has a 4,000 b/d capacity and maintains a 22% share of the finished lubes market.
The main problem in Brazil is government intervention. Petroleum prices are seen as key to the fight against inflation. Petroleos Brasileiro SA provides 95% of Brazil's base oils, said Mark Bennington, marketing manager, Shell Brasil. Base oil prices can change overnight.
No private company can sell petroleum products at a price higher than Petrobras. In the lubricants sector, companies can set their own prices, but 25%/month inflation makes maintaining a price list impossible.
"Companies have to concentrate on day to day pricing," said Bennington. "There is no time to attempt a more considered marketing approach."
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
