Petroleos Mexicanos set to commence petrochemical JV with Mexichem after receiving final board approval

18-Sep-12

Petroleos Mexicanos, the world’s fourth-largest oil producer, is poised to begin a petrochemical joint venture with Mexichem SAB (MEXCHEM) after receiving final board approval this week, as per Bloomberg. The companies will invest about US$200 million to increase the capacity of facilities in the eastern state of Veracruz. Mexichem, the Latin American chemical producer that has bought more than 15 companies since 2007, will contribute about 60% of the US$556 mln investment required to create the new company. Pemex, based in Mexico City, expects to boost vinyl chloride production to more than 400,000 tons annually, which represents a 138% increase from this year’s output. The deal, announced in June 2011, has been waiting for Pemex board backing since it got antitrust approval in October. Mexichem, based in Tlalnepantla, Mexico, wants to reduce its dependence on third-party vinyl chloride producers such as Dow Chemical Co. (DOW) Vinyl chloride (VCM). “This kind of integration with Pemex will allow us to compete on more equal footing with foreign chemical makers,” said Enrique Ortega, Mexichem’s director of strategic planning and investor relations.