09 November 2012 21:34 [Source: ICIS news]
HOUSTON (ICIS)--The annual meeting of the Latin American Petrochemical Association (APLA) will begin on Sunday in ?xml:namespace>
However, the subsequent increase in petrochemical demand could be met by imports from the
Those imports could grow as
“This is a structural change in the
The advent of shale gas, which has already given US producers a cost advantage for energy, will also provide an advantage for feedstock.
The result has been a flood of new crackers, which will rely on low-cost ethane as a feedstock. Downstream projects will soon follow the crackers, and
For future Latin American projects, their feasibility will depend on whether the plants can secure enough ethane at US Gulf prices, Bauman said.
Any proposed naphtha-based projects dependent on exports are unlikely to go through.
“Shale gas is going to be killing some of the projects that were solely export projects,” said Jorge Buhler-Vidal, director of Polyolefins Consulting.
Those products from the
Those infrastructure projects − as well as the nation's growing middle class − should jolt the economy, Buhler-Vidal said.
Altogether, the IMF expects
He estimates that 75-80% of
In fact, polyethylene (PE) imports made up 25-30% of the country's demand, Bauman said.
The increase in PE imports could threaten the Brazilian industry by lowering domestic demand for ethylene. In response, Brazilian crackers would reduce operating rates, which would lower production of ethylene as well as other naphtha-based derivatives, such as propylene and crude C4.
That would tighten feedstock supplies for downstream consumers of those derivatives.
“It is a strategic industry, and I think that it is a fair thing for them to do,” Bauman said.
In the short term, this should provide a boost to
“The medium-term impact will depend on internal and external factors, such as the further development of internal consumption and of the local cost structure, reactions by
At the same time Brazil could develop its own low-cost feedstock, particularly the Complexo Petroquimico do
The petrochemical portion of the complex will likely rely on associated gas produced from
When finished, Ethylene XXI will produce 750,000 tonnes/year of high density PE (HDPE) and 300,000 tonnes/year of low density PE (LDPE), which will reduce some of
In addition to Ethylene XXI, vinyls producer Mexichem is considering a joint venture with Occidental Chemical (OxyChem), under which the US-based company would build an ethane cracker in
Meanwhile, to facilitate natural gas imports from the
However, the scale of work required to develop
Mexican law limits energy production by companies other than Pemex. Equity stakes and joint ventures are prohibited, Garcia Alcocer said.
President-elect Enrique Pena Nieto had discussed changing
For now, Pemex is concentrating on its deepwater oil production, so shale gas will have to wait, dimming the prospects for more ethane-based ethylene projects.
These shortages persist even though
However, government policies are discouraging shale gas development, Buhler-Vidal said, as it requires equipment that is not locally available.
Customs regulations make it difficult for foreign companies to bring equipment in and out of the country. Argentine currency controls make it difficult to exchange pesos for dollars.
In addition to regulations, Argentina had nationalised YPF, which was once majority-owned by Repsol.
The move will likely discourage foreign investors.
With limited prospects for increasing energy production,
Already, shortages of natural gas in
Meanwhile, the outlook for
After growing by 8.9% in 2011, the IMF estimates that the Argentine economy will grow by just 2.6% in 2012 and 3.1% in 2013.
Arias said such a slowdown, combined with limitations on imports, should create demand constraints, affecting utilisation rates and margins.
The APLA conference ends on Tuesday.
($1 = €0.78)
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