The spotlight on petrochemical investment in the Americas has shone on the US shale gas boom and the resulting rash of planned new ethane crackers that could increase US ethylene capacity by about 32% by 2017-2018. But Latin America's game-changer could be Brazil's pre-salt oil and gas bounty, as well as shale gas formations in Argentina.
Naphtha crackers today are not competitive with their ethane counterparts - a fact acknowleged by Isabel Figueiredo, director of Brazil-based petrochemical producer Braskem, who spoke at the 6th EBDQUIM conference in Praia do Forte, Brazil, hosted by Brazilian association of chemical and petrochemical distributors Associquim in mid-March.
Braskem is already preparing to build a 1.05m tonne/year ethane cracker in Mexico through Braskem Idesa, its 60:40 joint venture with Mexico's Grupo Idesa. The project, with associated polyethylene (PE) units, is expected to be complete by mid-2015.
Its next big undertaking will be Comperj - the long-anticipated project with state oil firm Petrobras, which is expected to be the largest ever in Latin America. Braskem will define the scope of Comperj in 2012.
The ultimate success of Comperj will be tied to Petrobras's development of its giant offshore oil and gas reserves, which lie underneath a massive layer of salt. This could contain up to 10bn barrels of oil equivalent.
Petrobras plans to invest a total of $225bn (€171bn) during the 2011-2015 period. This could significantly boost natural gas production, providing cheap ethane feedstock for petrochemicals.
Meanwhile, Argentina will start to develop its large shale gas reserves. In February, its largest energy company, YPF, raised its estimate for shale oil and gas reserves from less than 1bn bbl to 22.8bn bbl.
YPF, majority-owned by Spain's Repsol, is under heavy government pressure to develop its oil and gas reserves, as falling production has led to greater imports. Natural gas shortages in 2010 resulting from a cold winter led to severely curtailed production at petrochemical operations in Bahia Blanca. In neighboring Chile, where Methanex has four methanol units, the Canada-based producer is relocating a unit to Louisiana, US, because a lack of natural gas supply has meant only one plant is in operation.
However, development of shale gas in Argentina and the pre-salt oil and gas reserves off the coast of Brazil could go a long way to making Latin America more competitive in petrochemicals.