Monday, January 24, 2011

Cyclic petrochemical markets and Pequiven strategy

The last message given by the SABIC Europe's CEO before the unification of all the SABIC organization was very clear:

"Although everybody knows that petrochemicals is a cyclical market, it still strike me the fact that we keep repeating the same mistakes over and over, building a plant during high poliolefins prices, and commisioning the plant when prices are low".

For me, that sentence describes exactly Pequiven's strategy. But first let's take a look of a typical cyclical behavior, and some advise of investment:

If you change the x-axis by years, you can easily spot where you should have invested, how much time you should spent building your plant to take maximum profit of your investment (risk is present, but under control).

Now lets take a look of Pequiven's strategy:

All investments were made when the oil (and therefore immediate intermediates) were over the 100 USD line, just at the top of the hill. Then, not surprisingly, prices tumbled and all investments stopped. And now, when oil prices are recovering, the Pequiven's investments are being resumed, as commented on the previous post.

This information is not at all a secret, and still many companies make this error, and regrettably Pequiven is among them.

Monday, January 10, 2011

Pequiven's lost years

Image from previous post

Happy new year 2011!

As a good exercise for this new year, I was reviewing the status of Venezuelan investment.
More than a year ago I've published this table of coming investments in Venezuela, where it shows a 300kta worldclass LDPE plant to be built in Venezuela.
Basic engineering and procurement for this investments were given to the italian company Tecnimont, where it says that commisioning will occur this year 2011.
However no more information of this plant has appeared any more. Not even in Polinter webpage is any clue of this construction, in fact it says that it will be finish in 2014.
The latest news are that Pequiven is still interested in investing in Paraguana refinery complex, again to be due in 2014.
It is a pity that such a good plan for investment launched in the year 2007 will not materialize this year.