Pemex, Serbo near feedstock deal for Mexico petchem project

17 January 2002 23:36  [Source: ICIS news]

MEXICO CITY (CNI)--State-run oil monopoly Petroleos Mexicanos (Pemex) is nearing agreement with construction firm Serbo on a long-term feedstock contract for Serbo's $3bn (Euro3.4b) Altamira petrochemicals project, a Pemex executive said Thursday.

Marcos Ramirez Silva, head of Pemex's natural gas and basic petrochemicals unit, told CNI today the two parties expect to make a decision on signing a contract in the next few days. He did not say when a contract could go into effect.

According to proposals under discussion, he said, Pemex would supply a portion of the 71 000 bbl/day of naphtha sought by Serbo to feed a key cracker at the planned Altamira petrochemicals complex. He did not say exactly what portion of naphtha Pemex is prepared to provide.

Serbo would be granted import permits to make up the balance of required naphtha feedstock not provided by Pemex, he said. Ramirez Silva said the 25-year contract term initially sought by Serbo likely would be reduced.

Serbo plans to build a major 10-plant petrochemicals complex at Altamira, located on Mexico's Gulf coast in the state of Tamaulipas.

Construction at Altamira was to begin this quarter with chemicals production beginning in 2005. But uncertainty regarding the contract - which has been the subject of negotiations for some eight months - had put the project in limbo.

Earlier this week, an industry source told CNI the Altamira project had been shelved indefinitely because Serbo and Pemex could not come to terms on a feedstocks contract.

With no contract in hand, Serbo had pushed back construction start dates from this quarter and had seen private investors shy away from the project, sources said.

If brought to fruition, the Altamira project would be Mexico's first major petrochemicals complex financed by the private sector, according to Serbo, which bought heavily indebted Mexican contractor Bufete to help prepare for construction of the complex.

Anticipated annual capacity in the project was 4.1m tonne in nine products: butadiene, high- and low-density polyethylene (PE), polypropylene (PP), ethylene oxide, propylene oxide, styrene, alkylbenzene and paraxylene.

By: Robert Donnelly
+1 713 525 2653

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