APLA: Project pipeline keeps delivering

Simon Westbrook

07-Nov-2014

Investment continues in Latin America’s petrochemicals sector, but some projects face feedstock issues and all are having to compete against US-based investments using cheap ethane

The US shale gas and tight oil ­phenomenon has reshaped the Latin American petrochemical industry, forcing regional players to ­re-­evaluate their cost position against expansion in North America. In the current landscape, the search for more competitive gas-based ­feedstock is paramount and those who can find it and can develop it, have the potential to prosper.

Proyectos siguen MOVIÉNDOSE adelante

LA INVERSIÓN continúa en el sector de la petroquímica de América Latina, pero algunos proyectos se enfrentan a pro­­blemas de materia prima y todos tienen que competir con las inversiones usando etano barato de los Estados Unidos.

Sin embargo, se están realizando proyectos en toda América Latina, desde México – Braskem e Idesa están construyendo el enorme proyecto Etileno XXI – a Brasil, donde se están realizando expansiones a refinerías y para fertilizantes. En Perú, van a construir un gasoducto, alentando a planes de inversiones en etileno y fertilizantes. Bolivia y Venezuela también están tratando de desarrollar nuevos proyectos.

Sin embargo, preocupaciones sobre materias primas están obstaculizando una serie de proyectos petroquímicos en América Latina, en Brasil en particular. Hay mucha actividad en Brasil en el desarrollo de la producción de productos químicos de base biológica, usando la abundante cosecha de caña de azúcar del país.

One project that will be able to compete is Mexico’s Ethylene XXI project, a joint venture between Brazilian petrochemical major Braskem and Mexico’s Grupo Idesa. The partners have secured a price formula for ethane feedstock from state-run Pemex that is based on US reference prices at Mont Belvieu, Texas.

Also in Mexico, chemical major Mexichem has signed a joint venture with Pemex to bring a vinyl chloride monomer (VCM) plant up to its intended capacity. The overhaul is expected to double VCM capacity to 400,000 tonnes/year by September 2015.

Energy reform in Mexico will likely invite further petrochemical development, although how long that takes will depend on how that reform is implemented. Industry analysts suggest additional oil and gas supplies for petrochemical projects could be available by 2020.

BRAZILIAN DEVELOPMENTS
Brazil’s state oil company Petrobras says its first 230,000 bbl/day refining train at the Complexo Petroquimico do Rio de Janeiro (Comperj) is due to start operations in August 2016. Braskem is in discussions with Petrobras for feedstock supply for the petrochemical part of Comperj, which will produce base petrochemicals (ethylene and propylene) as well as derivatives.

Operations at the Petrobras Abreu e Lima refinery in northeast Brazil were expected to begin on 4 November, the company said. The refinery was planned to start running at half capacity, processing 115,000 bbl/day, with a second 115,000 bbl/day train expected to come on line in May 2015. Petrobras is set to make further investments in its refining division as it seeks to almost double output of petroleum products from current levels of 2m bbl/day to 3.9m bbl/day by 2030.

The company is also focused on boosting domestic fertilizer production. Brazil, the fourth-largest consumer of fertilizers in the world, is heavily dependent on imports, which currently meet around 70% of domestic demand. Japanese constructor Toyo Engineering was recently awarded a contract to build the Nitrogen Fertilizer Unit 5 (UFN V) in Uberaba in the state of Minas Gerais. The plant will have a production capacity of 519,000 tonnes/year of ammonia using ­natural gas feedstock and is ­expected to start-up in the first half of 2017.

Also being built is the Nitrogen Fertilizer Unit 3 (UFN III) plant at Tres Lagoas in the state of Mato Grosso do Sul. The plant, with capacities of 1.2m tonnes/year of urea and 761,000 tonnes/year of ammonia, will begin operations in the first quarter of 2015. A 303,000 tonne/year ammonium sulphate (AS) plant located at Petrobras’s existing Fafen-SE fertilizer complex in the northeastern state of Sergipe began operations in February.

FEEDSTOCK TALKS DEADLOCK
Braskem and Petrobras recently extended an existing naphtha-supply contract until February 2015 after failing to agree to a long-term pricing formula for the feedstock. Braskem needs the naphtha for three crackers in Brazil. The deadlock is affecting a number of Euro-pean-led projects in the country.

In April, Poland-based synthetic rubber producer Synthos announced plans to build an 80,000 tonne/year neodymium polybutadiene rubber (Nd-PBR) plant at the Triunfo petrochemical complex in southern Brazil. The company signed a conditional 15-year agreement with Braskem for the supply of butadiene (BD) feedstock. Braskem needs naphtha to make BD.

A proposed joint venture between Germany-headquartered Styrolution and Braskem to produce styrenics in Brazil is also exposed. The project, which would produce specialty styrenics, acrylonitrile butadiene styrene (ABS) and styrene acrylonitrile (SAN) copolymers, has already been approved by Brazil’s antitrust regulator, Cade.

In what was described by one insider as “the most significant event for the industry in all of Latin America in several years”, Petrobras subsidiary Petroquimica Suape began in August operations at a first 225,000 tonne/year production line at its new polyethylene terephthalate (PET) production facilities in northeast Brazil. A second 225,000 tonne/year line is expected to open in the coming months.

Also in Brazil, Germany-based BASF said production at its new acrylics plant at Braskem’s Camacari petrochemical complex would begin at the end of this year. The plant, which will produce acrylic acid, butyl acrylate (butyl-A) and superabsorbent polymers (SAP), will receive propylene feedstock from Braskem.

 

 Copyright: Rex Features

PERU AWARDS PIPELINE CONTRACT
Peru’s petrochemical potential was given a recent boost after the Gasoducto Sur Peruano (GSP) consortium was awarded a contract to build and operate a 1,000 km pipeline that will deliver natural gas from the Camisea fields down Peru’s Pacific coastline. Peru’s government subsequently announced it would set up a multi-sectoral commission to advance the development of a petrochemical hub in the south of the country.

According to the country’s energy and mines minister, Eleodoro Mayorga, the first plants to be built would use methane for fertilizers and explosives, and ethane for ethylene and PE. The government will present a detailed business proposal in early 2015. The potential for development has already sparked interest from investors in Brazil, China, the US, Canada and other countries, Mayorga said.

In 2012, Braskem and state oil company Petroperu carried out a study into the technical and economic viability of a 1.2m tonne/year ethylene/PE plant in the region. Braskem’s director for South America, Sergio Thiesen, reiterated the feasibility and potential profitability of the project, despite competition from cheaper US-produced shale gas. “The studies we carried out with Petroperu showed it is possible to develop a petrochemical hub along the Peruvian coast that can compete with US shale projects,” Thiesen told Peru newspaper El Comercio

BOLIVIA GATHERS PACE
Bolivia’s plans to exploit its vast natural gas reserves and kick-start the development of its petrochemical sector appear to be gathering pace, albeit gradually. In October, state energy company YPFB inaugurated the Gran Chaco natural gas liquids (NGLs) separation plant, Bolivia’s “flagship project in the area of hydrocarbons and industrialisation”, according to YPFB president Carlos Villegas.

The plant will eventually process around 32m cubic metres/day (mcm/day) of natural gas to produce 2,247 tonnes/day of liquefied petroleum gas (LPG), most of which has been earmarked for export to Brazil and Argentina. The plant will also produce 3,144 tonnes/day of ethane to serve as feedstock for an ethylene and PE plant that the company plans to build in Gran Chaco, and propane for a proposed propylene and PP plant, also in the region.

Italian firm Tecnimont submitted conceptual engineering studies for both plants earlier this year. YPFB is also studying the viability of an aromatics plant, which could use surplus LPG from the Gran Chaco separation plant.

Meanwhile, Bolivia’s central bank has granted YPFB’s downstream subsidiary EBIH financing to build a 10,000 tonne/year tubing and film plant in La Paz. The plant will use PE as feedstock, which will initially be imported, then supplied by the proposed Gran Chaco ethylene/PE plant.

The project is part of the company’s $2.73bn investment plan through 2017 to build a number of new industrial complexes. Projects include a 1m tonne/year methanol petrochemical complex, currently at the conceptual engineering stage; a nitrogen fertilizer plant; a PVC plant; an aromatics plant; and an ethylene oxide (EO) and ethylene glycol (EG) plant.

VENEZUELA AND COLOMBIA MAKE PLANS
Venezuela’s state-run petrochemical company Pequiven plans to invest around $4bn in a string of construction projects aimed at increasing production of plastic resins. Projects in the pipeline include the 800,000 tonne/year Olefins III plant, a 600,000 tonne/year PE plant, a 37,000 tonne/year biaxially oriented polypropylene (BOPP) plant, a 240,000 tonne/year PET plant and a 460,000 tonne/year homopolymer and copolymer plant.

In Colombia, Ecopetrol’s overhaul of its Cartagena refinery aims to increase capacity from 80,000 bbl/day to 165,000 bbl/day, boost the refinery’s conversion rate from 76% to 95%, and double propylene capacity. The project is expected to be completed in early 2015.

 

 Brazil is investing in bio-based ethanol

Copyright: Rex Features

BRAZIL RENEWABLES STRENGTHEN
The outlook for advanced biofuels and bio-based chemicals in Brazil remains strong as companies look for competitively-priced, alternative feedstocks that will provide greater flexibility, security and profitability.

In September, Brazilian firm GranBio began production at the first commercial-scale plant for cellulosic ethanol in the southern hemisphere in northeast Brazil. The unit, currently the world’s largest of its kind, uses sugarcane bagasse and straw as feedstock, and has a nominal production capacity of 82m litres/year of ethanol.

“Beyond the inauguration of a plant, this project is proof that Brazil can lead the global biotech industry based on its agriculture potential,” said Granbio’s president, Bernardo Gradin.

Raizen, a joint venture between Shell and ethanol giant Cosan, expects to inaugurate its cellulosic ethanol plant in the southeastern Brazilian city of Piracicaba before the end of the year. The company plans to build a further six cellulosic plants in Brazil by 2024, with output topping 1bn litres/year of biofuel.

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