Gas uncertainties stall Bolivia fertilizer plant

30 June 2008 22:03  [Source: ICIS news]

CARACAS (ICIS news)--Austin Powder has indefinitely postponed construction of a fertilizer plant in Bolivia, pending gas negotiations with the government, a company official said Monday.

"Our project is on hold, essentially, as we work with the government to get feedstock," said John Rathbun, managing director of Austin International, the foreign arm of Austin Powder.

The Ohio-based company, which specialises in manufacturing explosives for the mining industry, wants to build a plant capable of producing at least 66,000 tonnes/year of ammonium nitrate and 50, 000 tonnes/year of NPK (nitrogen, phosphorus, potassium) fertilizers. The fertilizers would be entirely devoted to supplying Bolivia's internal market, while some of the ammonium nitrate, which is used to make explosives, would head for quarries in northern Argentina.

Burgeoning interest in developing Bolivia's petrochemical sector, alongside its abundant supply of natural gas, was thrown into disarray in 2006, when the government took over majority stakes in gas fields that were previously administered by private oil companies.

Austin Powder previously had feedstock supply contracts with privately-owned companies but those were nullified once the state took over control. The company now has to negotiate with Bolivia's state-owned YPFB to secure its gas.

"We've continued to move equipment down there. It's arriving into the site as we speak, so we're still going forward with the belief that [the project] will take place," said Rathbun.

Most of the natural gas produced in Bolivia is exported to neighbouring Brazil to fuel power plants there. The rest is divided between Bolivia's internal consumption and exports to Argentina. But YPFB has indefinitely suspended exports to Argentina, which has caused a domino effect in regional supplies.

For example, Methanex had to shut in most of its methanol production in Chile after Argentina was forced to curtail natural gas exports to its neighbour and ration feedstocks for its own power plants. The insecurity of natural gas supplies and subsequent power rationing has cast a chill on further investments in Argentina's petrochemical sector.

In a recent interview with a Bolivian daily, Raul Vargas, the president of Petroquimica Boliviana, which would operate Austin Powder's local project, said the project could move forward and be completed by 2010 if Bolivia decreases its gas allotment to Argentina.

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By: Jasmina Kelemen
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