How the oil crisis impacts on Argentine biodiesel

Soybean is one of the productions that received the splinters from the pump that represented for the world economy the biggest drop in the value of oil since 1991.

Although it recovered ground this Tuesday after falling as much as seven dollars per ton at the start of the week, it was another blow to an international price of the oilseed that is at one of its lowest values ​​in more than a decade.

At the same time, this oil crisis also damages one of the main by-products obtained with the industrialization of soybeans: biodiesel.

This biofuel is a substitute for oil that loses competitiveness and is practically out of the game if the international price of oil collapses, as happened last Sunday.

“The fall in oil is very bad news for the sector,” recognized the president of the Association of the Argentine Soybean Chain (Acsoja) and former head of the Argentine Chamber of Biofuels (Carbio), Luis Zubizarreta.

During a conference that he offered together with his peers on the maize (Maizar), wheat (ArgenTrigo) and sunflower (Asagir) chains, within the framework of the Expoagro fair, he said that it constitutes a headache in “a world that demands sustainability and in which Argentina has enormous potential to sell ‘green’ energy. “

External and internal

The president of the Chamber of the Oil Industry of the Argentine Republic (Ciara), Gustavo Idígoras, agreed with Zubizarreta on this negative scenario and added that the impact can be felt more strongly in the small and medium-sized companies that process soybeans in the interior of the the country and sell biodiesel to the oil companies that operate in Argentina, so that they “cut” 10 percent of the diesel.

“We have to divide this into two parts: the export market will continue to be active because European importing countries, which are our only market today, have the obligation to buy it every month to meet a quota, regardless of the price of a barrel. therefore, the oil companies will have to bear the losses, but in Europe, “Idígoras explained to The voice.

In this way, it is in the internal market that problems arise. “The formula used to establish the price of biodiesel for the 10 percent cut can make production unfeasible for small and medium-sized companies in the interior,” said the Ciara head.

This is immediately. In a medium and long-term view, Idígoras considered that the large soybean processors located on the edge of the Paraná, in the Gran Rosario, would also suffer the impact.

“This deteriorates our chances of exporting and reduces the possibilities of returning to the Peruvian and North American markets (closed by complaints from dumping), that no matter how much efforts we make, both at the governmental and private levels, they will have less interest in reopening for a product that cannot compete with oil under these conditions, “he added.

Law suspended

Under this scenario, an additional problem is that this year the Biofuels Law must be renewed or modified. The Bioenergetic League, which brings together the industry and the provincial governments where biodiesel and bioethanol are produced, proposes to increase the quotas for cutting gasoline and diesel. But that requires the acceptance by the oil companies, which are the ones that must buy these fuels, and which are financially complicated due to the government’s policy of freezing prices at the pump.

“The parliamentary debate will be even more difficult in a scenario of low oil prices,” said Idígoras.

Anyway, he related his expectation that this crisis will not spread too much. “The current situation does not have to stop us on the path of the future, which is towards the substitution of renewable energy for fossil fuels. Furthermore, this situation has more geopolitical than economic reasons; therefore, the price should return to normal levels , above $ 50 a barrel. The problem is that we don’t know when that will happen, “Idígoras concluded.