Fuel prices to drop over next two years

The CEO of Partex, an oil company owned by the Portuguese Gulbenkian Foundation until 2019 and then purchased by the Thai company PTT Exploration and Production, believes that fuel prices in Portugal will fall at least over the next two years.

“We are going to have a reduction in fuel prices because the [barrel] of Brent [from the North Sea and the one of reference for Europe] is going to end up – in fact, it already is – being affected,” António Costa e Silva told Lusa in an interview.

Portuguese citizens have not yet begun to feel this drop in the price at the pumps ‘deeply’, he said, in the next two or three weeks, this will already happen.

The Portuguese market depends a lot on the price of Brent and then the prices of the various refined products.

The drop in prices, though difficult to predict, may be 6 cents a litre, he said.

As for the period during which the price reduction in Portugal is expected to continue, Costa e Silva considered that it could be significant because, with the paralysis of the economy and the global crisis, the economic recovery will be extremely slow.

However, without a growing economy, there will be no sustained recovery in the price of oil, he added.

In this context of pandemic and economic recession, where there is an excess of oil supply and reduced demand for refined products, Galp’s decision to suspend the activity of its refineries in Sines and Matosinhos, as other companies around the world have done, makes sense, he said.

As for the fact that Galp shareholders approved this Friday in a general meeting the distribution of dividends and bonuses to directors and workers of the Portuguese oil company in a context of recession and an unpredictable pandemic, António Costa e Silva just said he would not comment.

However, for the Portuguese economy, the gains from this drop in fuel prices, which could be high, in a country still very dependent on the price of oil and with a heavy energy bill, this time will only be moderate.

To show how the Portuguese economy has a heavy energy bill, Costa e Silva recalled that there have been at least two years in which oil, gas and coal purchases in Portugal have reached €10 billion.

Only now, in the pandemic scenario, the situation is different. With economic activity very paralysed the gains will be more moderate and more limited.

On 17 June 2019, the Gulbenkian Foundation signed an agreement for the sale of Partex to PTT Exploration and Production, a Thai state-owned oil exploration and production company, for $622 million (around €555 million).

The Gulbenkian Foundation had announced its intention of leaving the oil exploration business, with assets valued at around €457 million, to be more sustainable, a business created in 1938 by its founder, Calouste Gulbenkian.

Worldwide, according to AFP, the Covid-19 pandemic has claimed more than 204,000 lives and infected more than 2.9 million people in 193 countries and territories.

In Portugal, 903 people have died out of 23,864 confirmed as infected, and there are 1,329 recovered cases, according to the Directorate-General of Health.

The disease is transmitted by a new coronavirus detected in late December in Wuhan, a city in central China.