Oil report

UPDATE 2-Brazil's aviation gasoline market disrupted amid quality concerns

(Adds BP suspending avgas sales)

SAO PAULO, July 13 (Reuters) - Brazilian state-run oil firm Petrobras has “preventively” stopped supplying imported aviation gasoline after chemical tests on an imported batch raised potential issues, a move that caused major fuel distributors BR Distribuidora and Raizen to suspend the sale of the product, according to filings on Monday.

Oil multinational BP said in a statement that its aviation fuel unit had immediately suspended sales of aviation gasoline to clients and resellers in Brazil as a precaution after Petrobras’ announcement.

Petroleo Brasileiro SA, as Petrobras is formally known, said on Saturday that the batch of imported aviation gasoline, or avgas, complied with the requirements laid out by Brazilian oil regulator ANP. However, internal tests led the company to notice certain chemical differences from other imported avgas batches.

“Petrobras is studying the hypothesis that a variation in chemical composition has affected the sealing and lining material in the fuel tanks of small planes,” the company said in a statement, adding that its investigation was preliminary.

Petrobras Distribuidora SA, as BR Distribuidora is formally known, is partially owned by Petrobras and is Brazil’s largest fuel distributor. It announced its decision to suspend the supply of avgas on Monday, as did Raizen, a joint venture between Royal Dutch Shell PLC and domestic ethanol producer Cosan SA.

On Friday, the ANP and aviation regulator ANAC announced they were creating a working group “to investigate complaints about the quality of aviation gasoline used in the country.”

Avgas, unlike jet fuel, is generally used in small aircraft, such as prop planes.

Petrobras has imported avgas since 2018 when operations at the President Bernardes Refinery in Sao Paulo state, the unit that produced the fuel, were suspended.

The company said in a statement it planned to restart domestic production of avgas in October. It did not specify the size of the batch in which the chemical anomalies were detected.

Reporting by Luciano Costa; Writing by Gram Slattery; Editing by Nick Zieminski, Richard Chang and Marguerita Choy