South America Oil Refining Market Outlook, 2030

The South American oil refining market has evolved significantly over the past century, beginning with early developments in the 20th century as national oil companies emerged to meet domestic energy needs. Countries like Argentina, Venezuela, and Peru were among the first to establish refining capacities, with Argentina’s YPF founded in 1922 and Venezuela’s Paraguaná Refinery Complex eventually becoming one of the largest in the world. The region’s total refining capacity stands at around 6.2 million barrels per day, with Brazil, Venezuela, and Argentina leading production. Brazil’s Petrobras, for instance, reported record refinery utilization in 2024 and announced a $4.8 billion plan to expand production of low-sulfur diesel and jet fuel. In Peru, the $6.5 billion modernization of the Talara Refinery in 2023 helped introduce cleaner, more efficient fuels. Demand for refined products has grown due to rising urbanization, industrial growth, and expanding vehicle fleets, especially in Brazil, Colombia, and Argentina. However, the sector also faces numerous challenges including aging infrastructure, financial instability, and political interference. Many state-run refineries operate with limited private investment, though countries like Brazil have begun liberalizing downstream markets. Environmental regulations are becoming stricter across South America, with many nations adopting fuel sulfur limits in line with global standards. Regulatory bodies such as Brazil’s ANP enforce safety, emissions, and quality norms, and certifications like ISO 14001 and ISO 50001 are increasingly pursued to meet sustainability benchmarks. Marketing and promotion efforts by leading companies often focus on environmental responsibility, fuel quality, and social impact, helping improve public trust in an industry historically criticized for pollution and inefficiency. Yet, refining expansion projects often face local opposition, especially from indigenous groups and environmental activists in sensitive regions like the Amazon.

According to the research report, ""South America Oil Refining Market Outlook, 2030,"" published by Bonafide Research, the South America Oil Refining market is anticipated to add to more than USD 38.07 Billion by 2025–30. The rising demand for refined petroleum products due to expanding urbanization, industrialization, and motorization across major economies such as Brazil, Argentina, Colombia, and Peru. As populations grow and vehicle ownership rises, the consumption of gasoline, diesel, and jet fuel continues to increase, creating constant pressure on domestic refineries to meet both quantity and quality requirements. Brazil alone accounts for over half of the continent’s refining capacity, and its state-owned giant Petrobras has committed billions to modernization projects that aim to boost efficiency and increase production of low-sulfur fuels, such as the S-10 diesel. Regulatory bodies across the region, such as Brazil’s National Agency of Petroleum, Natural Gas and Biofuels (ANP), have introduced sulfur reduction mandates, emissions standards, and fuel quality regulations in line with global norms. These requirements are compelling refineries to upgrade catalytic cracking units and introduce desulfurization technologies. Opportunities also arise from the increasing privatization of oil refining assets, as state-run firms seek to reduce debt and improve competitiveness by bringing in private players. For instance, Peru's PetroPerú is considering partial privatization to attract investment and streamline operations following the high costs of its modernization efforts. Moreover, Colombia’s Ecopetrol has successfully expanded its Cartagena refinery, allowing it to produce cleaner fuels and reduce import dependency, showcasing a replicable model for others in the region. Additionally, the growing regional demand for petrochemical feedstocks provides another opportunity for integration between refining and chemicals, potentially unlocking higher margins. Interesting trends such as bio-refining and renewable diesel initiatives are also emerging, particularly in Brazil where ethanol and biodiesel blending is already well-established.

Market Drivers

• Abundant Regional Crude Oil Reserves: One of the main drivers of the South American oil refining market is the region’s rich crude oil reserves, particularly in countries like Brazil, Venezuela, Argentina, and Colombia. Brazil’s deepwater pre-salt reserves and Venezuela’s Orinoco Belt offer vast supplies of heavy and light crude oil. This abundance creates a strong incentive to refine crude domestically, reduce fuel imports, and add value through downstream processing. National oil companies such as Petrobras are investing in upgrading and expanding refining capacity to utilize local crude more efficiently, which supports energy security and economic development.
• Rising Domestic Demand for Fuels and Petrochemicals: As South American economies recover and grow, there is increasing domestic demand for transportation fuels, cooking gas, and petrochemical derivatives. Urbanization, expanding middle-class populations, and industrial activity are boosting consumption of gasoline, diesel, aviation fuel, and LPG. Countries like Brazil, Chile, and Peru are experiencing growing energy needs in both the transportation and manufacturing sectors. To reduce dependence on imported refined products and meet internal market demands, governments are encouraging investment in refining infrastructure and modernization.

Market Challenges

• Aging Infrastructure and Underinvestment: A significant challenge facing the South American refining market is its outdated infrastructure. Many refineries in the region were built decades ago and have seen minimal modernization, resulting in low efficiency, frequent maintenance issues, and environmental non-compliance. Limited public and private investment, political instability, and economic volatility in several countries especially Venezuela and Argentina have further hampered the ability to upgrade facilities. These conditions limit the ability of refiners to process heavier or sour crudes and to meet modern fuel quality standards, thereby affecting competitiveness and profitability.
• Regulatory Hurdles and Policy Uncertainty: Regulatory and policy-related challenges are also prominent in the region. Inconsistent energy policies, shifting subsidies, unclear fuel pricing mechanisms, and complex approval processes make it difficult for companies to plan and execute long-term refinery investments. Political interference in national oil companies and abrupt changes in leadership or policy directions especially in state-controlled energy sectors have often led to stalled or reversed refining projects. These uncertainties discourage foreign investment and delay the much-needed modernization of refining assets.

Market Trends

• Refinery Modernization and Upgrade Initiatives: There is a growing trend across South America to modernize existing refineries to improve efficiency, increase capacity, and produce cleaner fuels that comply with international environmental standards. Brazil’s Petrobras has launched initiatives to upgrade key refineries such as REPLAN and RPBC. In Colombia and Peru, investments are being made to expand desulfurization units and improve energy efficiency. These modernization efforts are vital to enhance product quality, reduce emissions, and meet evolving market demands without building entirely new facilities.
• Push Toward Biofuels and Cleaner Energy Alternatives: South America is increasingly embracing biofuels and renewable energy as part of its refining and fuel distribution strategy. Brazil, in particular, is a global leader in ethanol and biodiesel production, integrating biofuels into its energy matrix through programs like RenovaBio. Refineries are being adapted to blend and distribute higher proportions of bio-based fuels, driven by both environmental goals and government mandates. This trend reflects a broader shift toward sustainability and positions South America as a key player in the global transition to low-carbon fuels.

LPG fuel type is moderately growing in the South America oil refining industry due to its rising adoption in residential cooking, transportation fuel alternatives, and export potential amid regional efforts to diversify energy use and reduce emissions.

The moderate growth of Liquefied Petroleum Gas (LPG) in the South America oil refining industry is being driven by a combination of domestic consumption trends, energy diversification goals, and export market opportunities. In many South American countries, especially in rural and low-income urban areas, LPG is increasingly seen as a cleaner and more efficient alternative to biomass and kerosene for cooking and heating purposes. Governments across the region, including Brazil, Argentina, and Colombia, have promoted LPG usage through subsidies, public awareness campaigns, and improved distribution infrastructure to address health and environmental concerns associated with traditional fuels. This domestic push is coupled with the gradual uptake of LPG in transportation, particularly as an alternative to diesel and gasoline in urban taxi fleets and delivery vehicles, contributing to reduced urban emissions and fuel costs. Furthermore, South America is seeing growing interest from international markets in LPG exports. With refining capacity slowly modernizing in some countries and upstream production of associated gas increasing especially in Brazil's offshore pre-salt fields and Argentina's Vaca Muerta shale basin refineries are better positioned to process and separate LPG components like propane and butane. Countries such as Venezuela and Peru are also exploring ways to revive or expand LPG production for domestic and regional trade. At the same time, global demand for cleaner fuels is opening up export avenues, particularly to energy-importing nations in Central America and the Caribbean.

Marine bunker application type is moderately growing in the South America oil refining industry due to increasing regional maritime trade, port expansion projects, and compliance with international maritime fuel regulations driving demand for cleaner, refined bunker fuels.

The moderate growth of marine bunker fuel applications in the South American oil refining industry is primarily fueled by the region's expanding maritime trade, strategic port development, and a growing focus on cleaner fuel standards in compliance with international maritime regulations. South America is home to several key ports that serve as vital nodes for global and intra-regional shipping such as Santos in Brazil, Callao in Peru, and Buenos Aires in Argentina handling increasing volumes of agricultural exports, mining products, and industrial imports. As trade routes continue to expand, the demand for marine fuel to support cargo vessels, tankers, and container ships is rising steadily, creating opportunities for refiners to cater to the bunker fuel segment. Furthermore, numerous South American countries are investing in the modernization and expansion of port infrastructure to boost their competitiveness and attract international shipping lines, indirectly supporting the demand for reliable and compliant marine fuels. Another critical factor contributing to the moderate growth is the enforcement of the International Maritime Organization’s (IMO) 2020 regulation, which mandates a global sulfur cap of 0.5% in marine fuels. This has compelled refiners to either produce or import low-sulfur fuel oil (LSFO) and marine gasoil (MGO), shifting the dynamics of the regional bunker fuel supply. Although the transition presents challenges due to limited desulfurization capacity in older refineries, it has spurred gradual investments in upgrading refining infrastructure and blending capabilities to meet the evolving needs of the marine sector.

Crude oil is the largest feedstock type in the South America oil refining industry due to the region’s abundant domestic crude reserves and long-standing reliance on conventional refining infrastructure designed primarily for processing native crude grades.

Crude oil continues to dominate as the primary feedstock in South America's oil refining industry largely because of the region’s substantial reserves and production capacity, coupled with the legacy refining systems that have historically been optimized to process locally sourced crude. Countries such as Venezuela, Brazil, Argentina, Colombia, and Ecuador are endowed with significant crude oil deposits, including both conventional and heavy oil reserves, making crude oil not only readily available but also economically viable for domestic refiners. Venezuela, despite its recent economic challenges, still holds the world’s largest proven oil reserves, while Brazil has emerged as a key player with its prolific offshore pre-salt fields. These abundant sources ensure a consistent and cost-effective supply of crude oil, making it the most logical and dominant input for regional refining operations. Moreover, the majority of refineries across South America were built decades ago, with configurations specifically tailored to process native crude grades, limiting their ability to pivot to alternative feedstocks like biofuels or natural gas liquids (NGLs) without significant capital investments. The continuity of using crude oil aligns with existing refinery capabilities, supply chain infrastructure, and logistical networks, reinforcing its dominance. Additionally, crude oil-based refining allows for the production of a wide spectrum of petroleum products required to meet the continent’s diverse energy demands, including transportation fuels like gasoline and diesel, as well as industrial and residential fuels. The dependence is further supported by ongoing government policies and subsidies in some nations that favor traditional fossil fuels, at least in the short-to-medium term. While there is an increasing push for refining diversification and energy transition initiatives, particularly in Brazil and Colombia, the high capital cost, technical complexity, and time required to convert existing infrastructure means that crude oil will continue to be the largest and most practical feedstock for the foreseeable future.

Conversion complexity type is moderately growing in the South America oil refining industry due to the gradual modernization of aging refineries to improve fuel quality, meet evolving product specifications, and increase processing of heavier crude grades.

The moderate growth of the conversion complexity type in the South American oil refining industry stems from a region-wide push to modernize outdated refining infrastructure to handle heavier crude grades and produce higher-value, cleaner petroleum products. Historically, many of South America’s refineries have operated with simpler configurations like hydroskimming, sufficient for earlier domestic demands and lighter crude processing. However, as global and regional fuel specifications tighten driven by environmental regulations and the International Maritime Organization’s sulfur cap there is a growing need to upgrade refining capacity with conversion units such as fluid catalytic crackers (FCC), hydrocrackers, and delayed cokers. These units allow refiners to convert heavy residual oils into lighter, more valuable fuels like gasoline, diesel, and low-sulfur bunker fuel. Countries like Brazil and Colombia have initiated refinery upgrade programs to increase efficiency, improve output quality, and enhance profitability through better product yields. Brazil, for instance, through Petrobras, has invested in upgrading key refineries to handle a broader range of crude inputs and maximize distillate production. Similarly, Colombia’s Ecopetrol has expanded refining capabilities at its Cartagena and Barrancabermeja facilities with a focus on conversion technologies. The rising production of heavy and extra-heavy crude oil in the region, particularly from Venezuela’s Orinoco Belt and Brazil’s offshore basins, further necessitates more complex refining to optimize yield and minimize residuals. While these developments support the steady growth of conversion complexity, the pace remains moderate due to several constraints. Many countries in the region face economic instability, limited public and private investment, and political uncertainty, which hinder large-scale refinery overhauls.

Colombia is growing in the South American oil refining industry primarily due to government-led modernization of refining infrastructure and efforts to meet rising domestic fuel demand while reducing reliance on imported refined products.

Colombia's growth in the South American oil refining industry is driven by a national strategy aimed at strengthening energy self-sufficiency and maximizing the value of its domestic crude oil resources. As one of the region’s significant oil producers, Colombia has recognized the importance of enhancing its refining capacity to support economic growth, stabilize fuel supplies, and reduce dependence on costly imports of refined petroleum products. In recent years, the government, in collaboration with state-owned oil company Ecopetrol, has focused on modernizing existing refineries and optimizing operations to meet both local fuel demand and international environmental standards. A prime example of this effort is the upgrade of the Cartagena Refinery (Reficar), which underwent a massive expansion project to increase its capacity and improve efficiency. This modern facility can now process heavier crude grades and produce cleaner, higher-quality fuels like ultra-low sulfur diesel and Euro V-compliant gasoline. The modernization has not only increased domestic output but also reduced the need to import refined fuels, saving foreign exchange and improving Colombia's energy trade balance. Similarly, upgrades to the Barrancabermeja Refinery, the country’s oldest but still vital facility, aim to extend its lifespan and bring its processes up to modern environmental and safety standards. These investments are part of Colombia’s broader energy development policy that prioritizes value addition, energy security, and sustainable growth. Domestic demand for refined products has been rising due to population growth, expanding urbanization, and increased vehicle ownership.

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