Unilever's sustainability programme - Watch and learn

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Last week Unilever presented its 10-year sustainability programme.
I heard that Unilever will not look anymore for short-term revenues, it will only focus in long term sustainability. This line of thought is based on the fact that it is not sustainable an ever-growing company.

The efforts are also connected to carbon footprint, water usage, waste management, energy efficiency and many other areas. Even Unilever wants to face the challenge of providing enough quality food for the BRIC countries (Brazil, India and China).

At first sight, Unilever's effort seems to me completely revolutionary and innovative (also P&G has similar sustainability programs), but after a closer look... In my opinion this is what national companies have been doing for the last 50 years.

The main issue of this post is: nowadays the private companies want to behave as a public owned company!!!

Lets take a look to PEQUIVEN and SABIC, two national petrochemical companies, which business is somewhat similar to Unilever, in the sense of providing solutions to end-customers needs.

The purpose of this companies has never been financial performance but provide a sustainable future for their stakeholders (in this case the coming generations of Saudi Arabia and Venezuela). To achieve this objective it has been necessary to invest against general opinion (low term revenue), taking the risk of financial exposure.

The end result is far from being clear, but my expected outcome is that they will behave as a cashcow during the bad times, and as a commercial success on the good ones.

Finally nothing more to be said than good luck to Unilever.

Saul Ameliach named again as Pequiven's CEO

According to El Universal, Saul Ameliach is back. After approximately one year of Inciarte as the president of Pequiven, a presidential order has named Ameliach as the first person of the company.

The last actions of Inciarte administration as I recall them were to launch the "Saman" software, and to expropiate fertinitro.

To my understanding, this nationalization has been in studies for many years, but having several stakeholders with different interest delay the negotiations.

The fact is that Ameliach is back and time will tell which path does Pequiven follows from now on.

Business Monitor International: "Brazil Petrochemicals Report Q3 2010" - Some thoughts about it

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After reading this website, I would like to make some comment about Brazilian situation and compare it with Venezuela.

- Brazilian policies have proven so far to be succesful.
- Petrochemical business are no longer looking directly to exports, but domestic market (fueled by coming Olympics and World Cup), is increasingly important.
- Market funds specialists recomends to invest in three different places: China, India and Brazil.

Brazil actual position could offer competitive prices, but the real challenge is to offer differentiated position, a long chain of added value. R&D opportunities are huges.

Venezuela in the other hand, could benefit in the surge of polyolefins demand in Brazil, by strenghtening cooperation mechanism, petrochemical business in Venezuela should offer solution to some of the Brazilian challenges. A well planned strategy, focusing on regional integration and cost differentiation.

Finally, for both countries, Venezuela and Brazil, they have to focus in the long added value in petrochemical business. If one of the links is missing, the potential could be undermined.

Recycling policies in Venezuela

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This is a rough translation from this information first made by Javier Brassesco.

The "Law of Integrated Waste Management and Solid Waste" was approved in January (first discussion), and several organizations are waiting for the National Assembly's invitation to participate in the "street parliamentarism" a prerequisite for the second discussion.

The Venezuelan Confederation of Industries (Conindustria) made a very technical analysis of this law in its website (www.Conindustria.org) where it identified a number of inaccuracies and inconsistencies and suggests amendments to some of its 164 articles.

There is clear that one of the items of greatest concern to the industry produces is number 42 of this law, which establishes that "(...) the producers, distributors and marketers of consumer products must implement programs return to ensure the effective reuse or recycle 100% of their packages within three months. "

In Conindustria argue that this obligation cannot be followed, because the country lacks the capacity to process recycle all packaging produced, let alone in the midst of a national electricity crisis.

The main complain is because it represents an attack on the producers of goods, while some punitive provisions (Article 151) are described as exaggerated , which among other things talks about the partial or total occupation of those places where inadequate waste management is carried out.

Clark Inciarte is back

Yes, the blog has fallen again into rumors and this is another mistake, so lets repair it.

Clark Inciarte is still Pequiven's CEO.

Clark Inciarte's legacy in Pequiven

Clark Inciarte was designated as Pequiven's CEO in august 2009.
And by a recent Chavez decision he is no longer the head of Pequiven.

To be able to assess his legacy the following assumptions were made:

The CEO's has a tight control with the Public Relations office of the company.
By taking a look at the news from august 2008 to august 2009 we will obtaine Ameliach's Pequiven, and from august 2009 to today, we will have Inciarte's vision of Pequiven.

The result of the news survey is:



The different colors correspond either to Ameliach or Inciarte, and the height of the bars correspond to a measure of how many newspaper published (M. P.) the same information. Therefore if 8 different newspaper published an increase in fertilizant output the bar will be higher than if only 2 newspaper did it.

By taking a look at the graph you can notice that Inciarte came in the worst moment for the projects, and didn't have it easy either with the labor unions.

It is important to notice that Ameliach didn't suffer any energy cuts, while at the beginning of this year, Pequiven had to save up to 20% of energy

The international donations of Petrocasas also stopped with Inciarte. The fertilizing business was more important, or at least it received more attention from the press. Concerning social responsability, it seems that Ameliach performed better. Corruption is bad for both administrations

Apparently, Inciarte's reality went different as Chavez's reality, as the social responsability and Petrocasas investment indicates, and this could be a more plausible cause than to act by himself without the government permission.

Pequiven and Petrocasas: some facts and figures

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This is a translation of a previous post.

The Petrocasas' project has always caught my attention. Most people in Venezuela, with some entrepreneurship flame in their hearts, think about building houses. There are around 2,500,000 families without a house simply because they aren´t any available.

The questions I want to answer in this post are:

- How much PVC does the Petrocasa project consumes?
- How much percentage is this consumption compared with total PVC production?

These are the facts:

A Petrocasa factory consumes about 3 tons of material per house.
It can consume around 400 kg/hour of raw materials.
Venezuela produces around 180 mty of PVC

If all Venezuelan PVC production is used to build Petrocasas you can build 60.000 houses.

The project goal is to built 15.000 houses/year, consuming around 30 - 45 mty of PVC. Consequently an 20% of national PVC production!!!.

As an ending note, if PVC production does not increase, the Petrocasas project can be compromised.

They are not random news, its a trend

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Petrochemicals project all around the world are being reconsidered or cancelled.

We hear that in Saudi Arabia project in Ras Tanura is being downsized and possible changed to a different location.

We also hear that in Qatar the Honam quits a 2.63 bln project planned. The excuse? Global financial crisis.

So, my thoughts about it... The same as latest SABIC Europe CEO, in its last speech before leaving the company: "The chemical business is a cyclical one, everybody knows it, but yet it strikes me how many people still don´t understand this situation and act according to it".

Braskem to review all investments in Venezuela

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It was obvious, but yet still, I didn´t want to see, Braskem is reconsidering all its investments in Venezuela, in order to adapt them to the new global reality.

What is this new global reality?

- The plastic consumers do not look for added value.
- The old saying: "Think global, act local" has been replaced.

In my opinion, the previous investments were already in line with today´s reality. This information, for me, is not more than a pateada de ahogado, something that simply will die, and is still trying someway to survive.

PVC in Venezuela

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Ok, I will translate one of previous entries in spanish.

The PVC or polyvinyl chloride is +30 year polymer product. In all these the process has become much safer (the monomer is a known carcinogenic compound), and their application are broader and broader. Their biggest blow was when it was forbidden to use it to contain potable water. Specifically its production in Venezuela started in 1979, and currently has an installed capacity of 190 MTA (which it expected to double by 2013).

The internal demand of PVC in Venezuela is about the 200 MTA, therefore there is little export margin. Although when those new capacity comes online, Venezuela will produce the double of its consumption and approximately an 20% of all the latinamerican market.

However, comparing the use of PVC in Venezuela, by CONAPRI figures, 80% of the production is used in piping. Comparing this percentage with other regions, apparently there is a huge margin for development. In fact, the so called "Petrocasas", are a good step.

In my opinion, more interest should be focused in producing PVC profiles and packaging.

Some thoughts about venezuelan plastic market

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As I previously said in the blog, the petrochemical business (polymers) is intrinsically linked to the end user consumption.

In order to select the best method or technology to produce any polymer, and market study has to be done to determine the trends of the consumers.

In the middle east for example, an ExxonMobil technology, which has the best cost position and high tonnage its selected.

In india, because some cultural particularities, its a batchwise process because of the numerous (over 100 I think) different grades they have to produce in a single plant.

In the Netherlands the polymers companies needs also to compete beside a cost position, to a differentiation position.

Now, How should a Venezuelan polymer producer company should behave in order to please the domestic market?

The example is the tooth-paste, I was amazed to find in Europe the toothpaste in which the cup have to be completely loosen from the tube in order to get paste out. It was different from Venezuela where everything is linked to an easy-to-open easy-to-close cup.

So the answer to the question is: similar to the US, the venezuelan consumer adopt very easily the packaging preferences of the american consumer.

Update - Braskem - Pequiven is reconsidering polyolefin plant location in Venezuela

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According to this source

Braskem intention is to relocate the PP plant from Jose petrochemical complex to Falcon. The production capacity its expected to be now 300 mta (from previous 450 mta). This reduction in the production capacity is indeed strange. I could only speculate in the reasons of it.

- Lack of propylene.
- Lack of market for high volumes of PP.
- To reduce capital expenses.

The 3bn project is still going, but IMO, somewhat delayed. The reason of the delay? Difficulties for funding and global crysis. This information was provided by Braskem CEO, so it can be trusted.

Update: the third reason appear to be the correct one, if built in Jose, an propane dehydrograntion plant is needed. In order to reduce the capital expenses, is it better to move the project to Falcon and use the FCC propylene rich streams.

PDVSA and PEQUIVEN, is it better for Venezuela to merge them?

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Pequiven historically has been part of PDVSA business, it was about 8 years ago when Pequiven was decided to be completely independent from PDVSA. After this decision was made, the 3bn projects were announced and Venezuela as a petrochemical global player was announced.

Today, as it has been discussed here, some of the projects could be suspended, and there is some rumors about Pequiven going back as a filial of PDVSA.

If we take the examples of POC (Private Oil Companies), we can find both models, TOTAL's whose petrochemicals brand is somewhat independent and ExxonMobil whose petrochemical business is totally dependant to the rest of the group.

In the NOC (National Oil Companies) examples, Saudi Arabia has everything. SABIC (partially private company) is independent from Saudi Aramco and also Saudi Aramco itself is pursuing a very ambitious petrochemical project.

In short words, no structure has emerged as the optimal and crucial one. In the blogger opinion, the petrochemical business should be separated from the Refining and extraction business, however the plants should be completely integrated and sinergy should exist between them.

The nature of the petrochemical business is intrinsically different from oil and refining business. If the decision-making for both parties is under the command of the same office, it will harm the correct development of the business.

In this way of thinking, I am not excluding close cooperation between some office of PEQUIVEN and PDVSA, but complete subordination of the first should not happen.

Venezuela, joint ventures, petrochemicals and oil.

Image: aca

After reading short gossip, Shell has said that the big oil companies are not interested anymore in doing business in Venezuela. The politic environment in the country is simply not good.

Although for an oil business is not necessarily bad news (Saudi Aramco, the NOC from Saudi Arabia is capable to develop a project equivalent to the whole venezuelan oil production), for Venezuela and specially for its petrochemical business -in my opinion- is bad news.

The political partners of Venezuela, who have developed their petrochemical business are Brazil and Iran, but they are not technology licensors, and our petrochemical projects will be "their" petrochemical projects.

Como muestra un botón: Brazil (Braskem) its reconsidering the location of the PP plant (previously planned in Jose), will be the new location in Venezuela?

Pequiven and Braskem are reconsidering the location of the PP plant

Apparently this breaking new will go into the mainstream in the next few days. More information to come...

Works for PEQUIVEN's petrochemical projects suspended

Picture taken from here

Information in spanish here.

The petrochemical projects that we have been blogging about before, apparently has been suspended, since the workers in charge of the preparation of the land has been fired. And furthermore, but they have not received their payment.

This information could delay the projects. In the petrochemical business, as well as many others, being in the right place at the right time is very important. If the venezuelan economy is looking again to export, it should put more effort in the advantages that the country has.

P.S:. 180 people just for land preparation? sounds like a lot of people for me. But again... I am no expert.