APLA ’07: Nexant sees Peru as large producer

17 November 2007 15:54  [Source: ICIS news]

By John Waggoner

BUENOS AIRES (ICIS news)--Peru will become a large regional petrochemical producer in the near future, Nexant's vice president for polymers Robert Bauman from the sidelines of an important industry meeting that began on Saturday.

Speaking from the Latin American Petrochemical Association (APLA) annual meeting that runs through Tuesday, Bauman said the award of gas supply contracts from the Camisea fields in Peru is just the beginning and that the country will soon emerge into a significant producer of polyolefins.

“By 2010 Peru could be producing 800,000 tonnes/year of ethylene,” Bauman said, which would likely be followed by investments in resins such as polyvinyl chloride (PVC) and polyethylene (PE).

Peru is also likely to become a warehousing location for resins from the Middle East for import to the region, he said. The advantage would be that importers could guarantee the delivery of product without delays.

The US government has backed a free trade agreement with Peru that will help the new petrochemical industry taking shape in the country to become a regional trade participant, which is one of the goals of the current Peruvian government.

Peru’s growth is of political interest to the US, he said. Current president Alan Garcia has followed a largely orthodox, pro-business agenda. 

“President Garcia has got to deliver,” Bauman said. “If he doesn’t, he’s gone and the Left will move in.”

Foreign investors would be responsible for building the industry, Bauman said. The first stage of the project will involve development of feedstock supply with an consortium led by Argentina's Pluspetrol and the construction of ammonia and ammonium nitrate production capacity.

“Peru needs infrastructure including port facilities, roads, and electricity, and some help from the government is needed,” Bauman said.

Bauman said that Colombia’s intent to build its industry would not necessarily be set back by Peru’s advancement, but that cost advantages would be the defining factor for the investments needed.

Colombia is also being considered for a free trade agreement with the US, which Bauman believed would likely be approved.

“The question is not political, but economic,” he said.

Current estimates are that Colombia could produce up to 500,000 tonnes of ethylene, which could make production of some derivatives possible, Bauman said.

By: John Waggoner
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