Paraguana Petrochemical Complex

It has been some months without posting, but surely the petrochemical news have been really interesting, so I expect to write more often from now on.

To get into shape for further posting, I will start by reviewing the current developments being done in the western part of Venezuela, specifically in Paraguana. Originally planned to be built in the east, the whole petrochemical complex was switched next to the biggest refinery in Venezuela (and biggest of the world until not so long).

The petrochemical complex will have the following plants:

- 800 kta of Polyethylene Terephtalate (PET)
- 600 kta of PTA (monomer for PET production)
- 600 kta of Styrene monomer
- 200 kta Acetic Acid
- 350 kta Monoethylene Glycol (MEG)
- 400 kta Polypropylene (several?)
- 250 kta Polyethylene (several?)

At first sight Pequiven's strategy is to take advantage of the availability of raw materials as well as the cost advantage of them.
As expected the developments are thought in the as close as the oil business as possible.

In following posts I will discuss how much of these developments will serve international and internal markets.

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.

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.

Unilever's sustainability programme - Watch and learn

Image source

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.