UpdateChems monitor Venezuela nationalisation plans

05 June 2009 20:47  [Source: ICIS news]

(Adds comments from Latin American petrochemicals consulting group paragraphs 6, 11; removed words "was discarded" paragraph 9)

HOUSTON (ICIS news)--Chemical companies were closely watching Venezuelan government plans to take hold of its petrochemical industry, while Brazil’s Braskem said on Friday its joint ventures in Venezuela would continue.

Braskem has two joint ventures with Venezuela state-owned Pequiven - Propilsur and Polimerica. The projects include a 450,000 tonne/year polypropylene (PP) plant and a 1.3m tonne/year ethylene unit.

Venezuela would require the country’s chemicals-makers to become minority partners in joint ventures with the state as the plants are declared a public utility.

The proposal could become law as early as next week, according to reports.

Braskem said it was "confident that [its] partnership with Pequiven will continue".

Rina Quijada, founder of IntelliChem, a US consulting group focusing on Latin American petrochemicals, said Braskem was not at risk because its joint ventures already have a majority ownership by Pequiven.

However, the status of privately operated Venezuelan polystyrene (PS) producer Estizulia was in limbo after the announcement of nationalisation measures by the government of President Hugo Chavez.

“No information has surfaced about the future of Estizulia and we do not know if our company will be included in the nationalisation drive,” a company source told ICIS news. “Anything can happen in this country, so we cannot rule anything out,” the source added.

The Venezuelan government would reject any attempt at international arbitration on the nationalisation issue because “Venezuela will not yield its jurisdiction in this type of dispute,” said Angel Rodriguez, president of the Energy and Mines Commission of the National Assembly.

Venezuela’s state chemical company Pequiven, has joint ventures with many private companies. It was too early to tell how the new requirement would affect each joint venture.

"This law may have a psychological impact on future investments in Venezuela's petrochemical industry," Quijada said.

A source with Mitsui de Venezuela, a subsidiary of Mitsui & Co, said, “We are studying the law right now and investigating the situation now.”

A 2-ethylhexanol (2-EH) producer said it saw the situation as a potential opportunity.

“We are trying to penetrate the Latin American market and we will watch the situation,” the producer said.

Additional reporting by Leela Landress, Hellen Berger and Ben DuBose

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