Products

Price Composition

While developing its products, from the well to the service station, Petrobras is always focused on its customers' total satisfaction.

However, the prices charged for these products do not depend solely on the Company. Taxes and marketing margins are a few of the components that impact the final price for the consumer. The following items explain how the price composition, the trade chain, and the pricing comparisons for the customers in several countries work.

  • Liquefied Petroleum Gas - LPG

    Based on the average LPG prices to the consumers in the main capital cities.

    LPG Market Chain Illustration
    Liquefied Petroleum Gas - LPG

    Liquefied petroleum gas, also known as LPG, is the most popularly consumed oil derivative. This is the main fuel for domestic use, and is used mainly to light residential stoves. For this reason, it is important the consumer know how this product’s market operates, from production to final consumption, and be aware of how its price is determined.

    This market is currently regulated by National Petroleum Agency (NPA) ordinances and by Law 9478/97 (the Oil Law). This law flexibilized the oil and natural gas sector monopoly, up to then held by Petrobras, and opened the fuel market in the country. LPG imports were approved in January 2002 and the market itself went on to define the pricing.

    LPG can be produced by Petrobras’ refineries, by other refiners installed in the Country, by private petrochemical plants, or it can be imported by any company the NPA authorizes for this purpose.

    LPG marketing starts with the producer or importer selling the product in bulk to the distributors. Distributors, meanwhile, can sell the product to the industrial segment (by and large in bulk, using tanker trucks), to retailers or directly to commercial, residential and institutional customers (in bulk or bottled).

    In addition to being able to purchase directly from distributors, when such distributors are authorized by the NPA do to so, commercial and residential consumers can also buy bottled LPG at the thousands of retail points of sale.

    The most common retail marketing approach is the 13-kg bottle, aimed solely at residential use and accounting for most of the LPG sales in the Country via retail points.

    The price of the LPG Petrobras markets in bulk can be represented by the sum of its parts plus state (ICMS1) and federal (CIDE2, PIS/PASEP3 and Cofins4) taxes. The price the consumers pay for the bottles at the retail points also includes the distributor and retailer marketing costs and margins.

    In most of the States, the ICMS is calculated based on an average weighted price for the final consumer (AWPFC), which is updated fortnightly by state governments. This means the price at the retailer service stations change even though no change was made to the part of the price belonging to Petrobras.

    By understanding that the final price paid for a bottle of LPG is composed of several parts, it is easy to realize that any change made to any one of them will impact the final consumer prices upwards or downwards. Again, it is important to emphasize Petrobras only controls a part of the price charged of the final consumer (view the figure of the price charged for the 13-kg bottle).

    It must be kept in mind that there are situations in which Petrobras does not participate in the product’s marketing chain. This is the case, for example, of the LPG produced by refineries and private petrochemical plants, and of the product that is imported directly by an agent other than Petrobras.

    The NPA monitors the prices charged by retailers all over the Country via weekly surveys. The results can be checked out at the Agency’s website (www.anp.gov.br).

    More information is available via e-mail, at sac@petrobras.com.br or by calling (55 21) 3224 9901.

    1. Tax on the Circulation of Goods and Services (or value-added Tax) – State Tax
    2. Contribution for Intervention in the Economic Domain – Federal Tax
    3. Social Integration Program / Public Service Employee Savings Program – Federal Taxes
    4. Contribution to Fund Social Security – Federal Tax

    ICMS includes the portion relating to the tax substitution, which is the amount collected by Petrobras relating to the sale of the distributors for the retail service and latter to the final consumer.

  • Gasoline

    Based on the average gasoline prices to the consumers in the main capital cities.

    Gasoline Market Chain Illustration
    Gasoline

    Competing with ethanol and VNG, gasoline currently fuels about 60% of the passenger vehicles in Brazil. For this reason, it is important the consumer know how this product's market operates, from production to final consumption, and be aware of how its price is determined.

    The gasoline market in Brazil is currently regulated by the National Petroleum Agency (NPA) and by Law 9478/97 (the Oil Law). This law flexibilized the oil and natural gas sector monopoly, up to then held by Petrobras, and opened the fuel market in the country. Gasoline imports were approved in January 2002 and the market itself went on to define the pricing.

    When filling their tanks up at reseller stations, consumers buy C-grade gasoline, a blend of A-grade gasoline with Anhydrous Ethanol. The gasoline the refineries produce is pure, ethanol-free. Distributors buy A-grade gasoline from Petrobras refineries and Anhydrous Ethanol from the producing mills (Petrobras holds stakes in a few mills). They then blend these two products to formulate C-grade gasoline. The proportion of Anhydrous Ethanol in this blend is determined by the Interministerial Council of Sugar and Alcohol (CIMA), and may range from 18% to 25%, through Resolutions.

    Grade "A" gasoline (ethanol-free) can be produced by Petrobras, by other refiners in Brazil, and by the private petrochemical plants; or it can be imported by companies that are authorized to do so by the National Petroleum Agency (NPA). Sold to the several distributors that operate in Brazil, grade “A” gasoline is then blended with ethanol, resulting in the grade “C” gasoline marketed to the thousands of service stations nationwide. This gasoline, in turn, is marketed to the consumer through the thousands of service stations in Brazil.

    The price Petrobras sells "A" grade gasoline to the distributors for is the sum of two parts: the Petrobras product amount and the taxes, charged by the states (ICMS1) and by the Union (CIDE2, PIS/PASEP3 and Cofins4).

    In most of the States, the ICMS is calculated based on an average weighted price for the final consumer (AWPFC), which state governments update fortnightly. This means the price at the retailer service stations change even though no change is made to the part of the price determined by Petrobras.

    The price the consumer pays for "C" grade gasoline, in addition to the taxes and to Petrobras’ part, also includes the cost of ethanol (set freely by producers) and the distributor and retailer station costs and marketing margins.

    When one understands that the gasoline price is formed by several parcels, it is easy to understand that any change made to any one of them will influence the price the consumer will pay for “C” grade gasoline at the pump upwards or downwards. As can be seen, Petrobras only influences one of the parts involved in forming the final price the consumer will pay, which is represented by the price charged at its refineries before taxes.

    There are situations in which Petrobras does not participate in the product’s marketing chain, such as is the case for imported gasoline, or when it is produced by an agent other than Petrobras.

    The NPA monitors the prices charged by service stations all over the Country via weekly surveys. The results can be checked out at the Agency’s website (www.anp.gov.br).

    More information is available via e-mail, at sac@petrobras.com.br or by calling (55 21) 3224 9901.

    1. Tax on the Circulation of Goods and Services (or value-added Tax) – State Tax
    2. Contribution for Intervention in the Economic Domain – Federal Tax
    3. Social Integration Program / Public Service Employee Savings Program – Federal Taxes
    4. Contribution to Fund Social Security – Federal Tax

    ICMS includes the portion relating to the tax substitution, which is the amount collected by Petrobras relating to the sale of the distributors for the retail service and latter to the final consumer.

    The consumer price is divided into three parts: producer or importer earnings, taxation and trade margins. In Brazil the trade margin is equal to the gross margins of distribution and resale gas stations.

    In the following graph gasoline prices charged in Brazil by Petrobras can be compared with the average prices charged in other countries. The “Refinery Realization” portion of the graph is the ex-tax refinery price, the “Trade Margin” portion represents trade margins, which oscillate according to the local fuel sales market, and the “Taxation” portion represents the tax load that, as you can see, has most influence on the difference in prices between the countries. The graph also shows that the prices charged in Brazil are aligned with the prices of other countries with open competitive markets.

    International Gasoline Prices Chart

    Note: The amount of anhydrous ethanol in C-grade Gasoline was 25% until Sep/11. From 11/01/10, it was reduced to 20%.
    Prepared by: Petrobras with data from the Central Bank, ANP, USP/Cepea, ENAP (Empresa Nacional del Petróleo - Chile), ANCAP (Admisnistración Nacional de Combustibles, Alcohol y Portland - Uruguay) and PFC Energy.
    Distribution and Retail Margins obtained by difference. Exchange rate considered = R$ 1.9545/$ (average daily PTAX in 2012).

  • Diesel

    Based on the average diesel prices to the consumers in the main capital cities.

    Diesel Market Chain Illustration
    Automotive Diesel Fuel

    In Brazil, automotive diesel fuel consumption is limited basically to the farming and road transportation sectors. These sectors are extremely important for our country’s economy and, for this reason, it is important the consumer know how this product’s market operates, from production to final consumption, and be aware of how its price is determined.

    The diesel fuel market in Brazil is currently regulated by the National Petroleum Agency (NPA) and by Law 9478/97 (the Oil Law). Diesel fuel imports were approved in January 2002 and the market itself went on to define the pricing.

    The diesel fuel consumed in Brazil can be produced by Petrobras, by other refiners installed in Brazil, and by the private petrochemical plants; or it can be imported by companies that are authorized to do so by the National Petroleum Agency (NPA). Petrobras markets the diesel fuel it produces in its refineries to distributors in operation in Brazil or directly to major consumers, such as thermoelectric plants.

    Since January 2008, it has been mandatory for all automotive diesel fuel marketed in Brazil to be blended with biodiesel, a renewable fuel produced by plants (private or belonging to Petrobras) based on vegetable oils or animal fat. This rule was laid down by the National Energy Policy Council (CNPE), by means of resolutions. In quarterly auctions organized by the ANP, Petrobras buys from the biodiesel producing plants the volume to be resold, also in auctions, to the distributors, who are responsible for the blending procedure. Currently, the proportion of biodiesel represents 5% of the final volume of diesel sold at the pumps, which from then on is called B5 diesel.

    The distributors then resell the diesel fuel/biofuel blend to the thousands of service stations, to retailer transporters (RTs) or directly to major consumes, such as cargo and passenger transportation, industries and farms. In the marketing chain, the RTs are in charge of reselling to major consumers that do not have their own structures, picking the product up at the distributors and delivering in directly to the customer.

    The price Petrobras sells diesel fuel to the distributors for is the sum of two parts: the Petrobras product amount and the taxes, charged by the states (ICMS1) and by the Union (CIDE2, PIS/PASEP3 and Cofins4).

    In most of the States, ICMS is calculated based on an average weighted price for the final consumer (AWPFC), which is updated fortnightly. This means the price at the retailer service stations change even though no change was made to the part of the price belonging to Petrobras.

    The price the consumer pays at the service station, in addition to taxes and to Petrobras’ part, also includes the biodiesel purchase cost and distributor and retailer costs and marketing margins.

    When one understands that the diesel fuel price is formed by several parcels, it is easy to understand that any change made to any one of them will influence the price the consumer will pay at the pump, whether upwards or downwards. As can be seen, Petrobras only influences one of the parts involved in forming the final price the consumer will pay, which is represented by the price charged at its refineries before taxes.

    There are situations in which Petrobras does not participate in the product’s marketing chain, such as is the case for diesel, whether imported or when it is produced by some agent other than Petrobras.

    The NPA monitors the prices charged by service stations all over the Country via weekly surveys. The results can be checked out at the Agency’s website (www.anp.gov.br).

    More information is available via e-mail, at sac@petrobras.com.br or by calling (55 21) 3224 9901.

    1. Tax on the Circulation of Goods and Services (or value-added Tax) – State Tax
    2. Contribution for Intervention in the Economic Domain – Federal Tax
    3. Social Integration Program / Public Service Employee Savings Program – Federal Taxes
    4. Contribution to Fund Social Security – Federal Tax

    ICMS includes the portion relating to the tax substitution, which is the amount collected by Petrobras relating to the sale of the distributors for the retail service and latter to the final consumer.

    In the case of diesel fuel, as for gasoline, refinery prices charged in Brazil are on a par with the prices in other countries. This is clear when looking at the green part of the graph.

    Trade margins represented by the brown portion depend on the local market where the product is sold. The “Taxation” portion, however, shows that the tax load in Brazil for diesel is lower than for gasoline, so that the end price for the consumer is lower. This tax load is the portion most strongly affecting the differences in consumer prices between the countries.

    Diesel International Prices Chart

    *The cost of Biodiesel is included in the distribution/resale margin. Since 11/01/10, the content of biodiesel in the blend is 5%.
    Prepared by: Petrobras, with data published by the Central Bank, the NPA, ENAP (Empresa Nacional del Petróleo-Chile), and PFC Energy. Distribution and retail margins per difference. Exchange rate considered = R$ 1.9545/$ (average of the daily PTAX in 2012).