INTERVIEW: Mexican voters may end Phoenix project

04 April 2006 22:12  [Source: ICIS news]

By Alex Manda

MEXICO CITY (ICIS news)--If the liberal Democratic Revolutionary Party (PRD) wins the 2 July national election, it plans to scrap the troubled Phoenix petrochem project and restructure state-owned Petroleos Mexicanos (Pemex), a party official said on Tuesday.

The PRD coalition has led by 8-10 percentage points in most polls since November. Other major parties are the conservative National Action Party, headed by current President Vincente Fox, and the centrist Institutional Revolutionary Party, which ran Mexico for most of the last century.

Francisco Javier Carrillo Soberon, the PRD’s shadow energy minister, told ICIS news that his party would kill Project Phoenix, which the Fox administration proposed as a government/industry joint venture to make 1.2m tonne/year of polyethylene. The government halved the proposal this year, omitting the joint-venture partners.

“We have to revise the whole petrochemical product manufacturing chain, and stop fooling the public by promoting a project that does not have a solid base,” said Carrillo, currently a deputy official for a Mexico City ward. PRD’s presidential candidate is Mexico City Mayor Andres Manuel Lopez Obrador.

The PRD would reconsolidate Pemex, eliminating the sale of partially finished products between segments of the company.

“If the company stays in a rigid structure of four subsidiaries we would be weakening the process of restructuring,” he said. “We would end the use of transfer prices between Pemex exploration and petrochemicals, to reestablish Pemex as one industry, and re--establish product chains so that the production costs become clear, and the final value of the product is made a priority,” he said.

Carrillo said the PRD would be reluctant to give feedstock discounts to joint-venture partners in the petrochemical industry, one of the points of disagreement surrounding the Phoenix Project.

He said the PRD would seek to make greater use of petrol-fired stations, renewable energy and nuclear power. “This diversification will allow us to reduce gas consumption … freeing gas from domestic production and redirecting it to the petrochemical transformation industry,” he said.

“Our idea is to reduce the demand for gas from the electricity generation industry, which is the main gas consumer in Mexico,” Carrillo said, estimating the industry accounts for 60% of Mexico’s natural gas consumption. “It was a strategic error to choose gas as the foundation for the electricity generation industry, knowing that Mexico’s natural gas reserves are small compared to its crude oil reserves.”

By: Alex Manda
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