Several projects involving development of indigenous refining capabilities and petrochemicals complexes initiated in Mexico

28-Nov-08
The Mexican petrochemicals industry has not managed to attract adequate investment from either private or public sources, as per BMI's latest report. Furthermore, despite housing substantial indigenous oil resources, the country is heavily reliant on the US for feedstock supply. However, the present government seems committed to reducing the country's dependence on petrochemicals imports. A large number of projects involving the development of indigenous refining capabilities and petrochemicals complexes have been initiated. State owned Pemex and its petrochemicals division Pemex Petroquimica (PPQ) enjoy a stronghold over Mexico's petrochemicals industry. Other major companies operating in the Mexican petrochemicals industry include local Alfa, Grupo Idesa and Mexichem as well as US-based DuPont. Pemex plans to invest MXN998 mln (US$91.5 mln) in its petrochemicals business during 2007. As reported in September 2007, PPQ plans to boost its total production of aromatics, styrene, ethylene and ethylene oxide by approximately 745,000 tpa. A Brazil-based company has agreed to purchase the entire output produced at the plant along with all the by-products generated. In April 2007, commercial production started at Pemex's new 300,000 tpa high-density/linear low-density polyethylene (HDPE/LLDPE) swing plant located in the Morelos petrochemicals complex. Furthermore, Indian Aditya Birla Group has outlined plans to invest US$200 mln in the Mexican carbon black industry over the next five-seven years. In June 2007, Alfa inaugurated the world's second-largest petrochemicals plant at Altamira in Tamaulipas state, which will manufacture purified terephthalic acid (PTA). The Mexican petrochemicals industry has not managed to garner much private sector investment. According to an update released by Mexican manufacturing industry chamber Canacintra in August 2007, suspension of production at approximately half of the country's petrochemicals facilities had resulted in a major rise in petrochemicals imports. Furthermore, cheaper imports from Asian countries may undermine domestic competitiveness to some extent. The industry is also over dependent on the US for supply of feedstock and other refined products. Mexico recently unveiled a five-year infrastructure development program, which calls for the investment of about MXN379 bln (US$35.3 bln) in the gas, refining and petrochemical sectors. A sum of MXN46 bln (US$4.25 bln) is to be invested on gas and basic petrochemicals, while MXN28 bln (US$2.59 bln) has been earmarked for the production of secondary petrochemicals.
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