Investments on Mexico's Fenix petrochem complex project curtailed by 50%

12-Jul-05

Preferential tariffs by the government have not been granted to the promoters of the Fenix petrochemical complex in Mexico. Thus Mexico's state-owned company has decided to scale down the project reducing investments to US$1 bln from US$2bln. Examining this situation, Pemex, the operator of all commercial petrol stations in Mexico is intending to submit a new, scaled-down project to its partners this week. The Mexican chemical market needs annual imports of over US$10 billion to meet domestic demand. In 2002, Pemex began seeking private investors for a US$2.6 billion, million ton ethylene complex. Pemex Petroquimica, a unit of the state owned Mexican oil company, short listed Nova Chemicals Corp. as a partner for a proposed petrochemicals plant in Mexico. A strategic joint-venture between Pemex, Nova and two Mexican companies - Grupo Idesa and Indelpro, was to develop a potential world-scale ethylene and polyethylene plant in Mexico. If the project was to proceed, startup of the complex could begin in 2009 or 2010, depending on market conditions. However, this project seems to have run into troubled waters. The partners involved in the project wanted special tariffs to purchase the raw materials needed for the project. However, the Finance Ministry of the state has not as of yet granted them this wish.