Mexican petrochemical industry needs political will

 
Arturo Garcia2.JPG
 

BY SPECIAL GUEST COLUMNIST ARTURO GARCIA

Is there a real future for Mexico’s petrochemical industry? We still have no answer, or at least we keep trying to justify that “with no answer” we still have an opportunity. But when will this opportunity materialize?

Because of its great economic impact downstream, we need to battle the enemy before us – that is, the lack of political will. There is a critical decision at hand to allow private companies to access ethane feedstock at a competitive price in a long-term supply contract.

It is one that is under President Calderon’s decision-making faculties, and must be made with a long-term view that appreciates the enormous benefits that arise in Mexico from an economic standpoint.

The Phoenix Project, Mexico’s planned multibillion-dollar joint venture cracker and derivatives complex, failed even with the full support of former President Vicente Fox, just because there was an alternative value for ethane as a fuel.

The issue of whether to sell ethane at a competitive price in a long-term supply contract to partners in the Phoenix project versus selling it as a fuel became a dogmatic struggle between economists, entrepreneurs, and politicians.

Unfortunately, short term vision and the lack of recognition of the great benefits that projects like this would bring to Mexican economy, prevailed.

Today we again have an opportunity, as low natural gas prices, at least in the3 medium-term, provide a great deal of competitiveness.

Yes, NAFTA region and its ethane-based crackers, are becoming competitive again – even enough to consider expansions or new crackers such as the one being planned in Mexico.

Mexico’s Ethylene XXI Project aims to build a 1m tonne/year grassroots cracker wholly-owned by private companies. Hopefully this time, our government will make the right decision to promote projects like this, finally recognizing that we have the obligation to create value through petrochemicals for the benefit of Mexican citizens.

Arturo Garcia (pictured above), based in Mexico City, is CEO of Mexican plastics distributor Resinas TB and former executive director of Mexico’s Phoenix project.

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