Pemex Petrochem may dissolve under restructuring - analyst

07 December 2009 22:28  [Source: ICIS news]

MEXICO CITY (ICIS news)--An analyst with Mexico's Center for Economic Research and Education (CIDE) said on Monday that state-run oil company Pemex would likely dissolve Pemex Petroquimica (PPQ) and merge it with the producer’s other subsidiaries under a restructuring plan under consideration.

Mexico energy industry analyst Miriam Grunstein said that PPQ's current incarnation was “absolutely pointless.” adding production costs for PPQ compared with other international companies were high.

She said a large part of the high costs was related to the high number of workers employed by PPQ - 14,000 - and a relatively low output of products such as polyolefins.

Rafael Beverido Lomelin, the director of PPQ, tendered his plan for a legally mandated restructuring to President Felipe Calderon in late November. However, the company's executive committee is keeping the plan secret until a decision is made on how to move forward.

Grunstein said she believed the plan was undergoing “passionate” debate within Pemex leadership.

Pemex representative Francisco Montano said the executive committee planned to meet on Wednesday, but added the restructuring plan had yet to be put on the agenda.

Specified by energy reform legislation passed in October 2008, the restructuring plan was meant to pave the way to make Pemex more profitable. The law calls for measures to “avoid duplication of activities and reduce operating costs, as well as improve efficiency between corporate units, subsidiary organisations, administrative structures and regional operations”.

Pemex was divided into four subsidiaries by Carlos Salinas, who was president from 1988 to 1992, with the intention of privatising certain areas, including its petrochemical outfit. However, the breakup caused breaks in production chains, and Mexico may be the only country where its refining is separated from its petrochemical production.

 “The plan is still confidential, because it affects so many workers; however, from conversations I've had, I believe Pemex will merge its subsidiaries and create areas of specialisation that handle the business as a whole,” said Grunstein, adding that there would likely be a technical division, a business development division and an operations division.

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By: James Young
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