Venezuela Pequiven, Japanese firms sign petchem agreements

06 April 2009 22:16  [Source: ICIS news]

CARACAS (ICIS news)--Venezuelan state producer Pequiven signed on Monday a broad array of energy agreements with several Japanese firms that could potentially lead to greater financing for petrochemical projects that are being threatened as lower oil prices erode the nation’s cash reserves.

Pequiven signed a memorandum of understanding (MOU) with Japanese trading company Marubeni to explore the possibility of working together in olefin and polyethylene (PE) expansion projects at the Ana Maria Campos Petrochemical Complex and a new fertilizer plant at Jose.

Pequiven signed another MOU with Mitsui to establish financing structures that would allow the trading house to participate in Venezuela’s petrochemical projects.

Pequiven also signed a MOU with Mitsubishi to study possibilities in developing and commercialising ammonia, urea, polyolefins and methanol at Jose.

The agreements, signed by Energy Minister Rafael Ramirez, would open the door to increasing energy exports to resource-poor Japan, while bringing in much needed outside financing to Venezuela.

Venezuela’s President Hugo Chavez has said publicly that his nation’s ambitious petrochemical expansion plans would continue despite the economic crisis. But in recent weeks, the socialist-inspired leader has  had to undertake a number of fiscal-tightening measures to adjust for lower oil prices, including rewriting a new budget to reflect an average price of $40/bbl instead of $60/bbl.

Japanese trading houses are becoming increasingly active as minority partners in Venezuelan energy projects. Last year, Sojitz signed on as a partner in Pequiven’s and Braskem’s joint venture to build a polypropylene (PP) and PE plant at Jose.

At the time, Braskem’s CEO said that Sojitz was a potential source of low-cost finance from Japan's state bank. The trading house could also assist with providing equipment at a competitive cost, as well as provide expertise with marketing the project's products.

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By: Jasmina Kelemen
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