High raw materials costs and lack of investment in new technology have hurt Mexico's plastics and petrochemicals industry, which has seen declining output in recent years. The Fénix project could reduce Mexico's multi billion dollar trade deficit in petrochemicals. The US$2bn Fénix petrochemicals project, being partnered by Canada's Nova Chemical, Grupo Idesa and Indelpro, could finally see the light of the day. Fénix investors have sought a 10% discount on feedstock and energy costs compared to those of US competitors, from the government, to counterbalance country and project risk.
The PPQ petrochemicals unit of Mexico's state oil company Pemex expects to receive a definitive answer from its partners in two weeks regarding a proposal for the project, that addresses the price that PPQ's Fénix partners (Nova Chemical and local petrochemicals companies Grupo Idesa and Indelpro) would have to pay for raw materials. As Fénix products would largely be consumed in Mexico, they could cut down on transport or logistical costs, hence the discount being offered would be equivalent to Pemex's transport and logistical costs related to exporting feedstock to the US. Pemex uses US Gulf coast prices as a reference for its exports to Houston.
If the partners do not accept the proposal, Pemex will offer them an alternative project for upgrading the existing La Cangrejera and Morelos petrochemicals complexes in Veracruz state. The upgrade would boost ethylene cracker production at each plant to 875,000 tpa from the current 600,000 tpa.
30-Aug-05 
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