The petrochemicals branch is not considered part of Pemex’s core business, something that is reflected in the amount of investment that the petrochemical division receives: Pemex allocated just 2% of its total investment budget to its petrochemical division for 2013, with little results to show for it so far. With recent news of the appointment of Manuel Sánchez Guzmán as Director General of Pemex Petrochemicals by President Enrique Peña Nieto, it is clear that the parastatal’s higher authorities want to see more efficiency from this subsidiary, especially with the most recent efforts from the private sector to breathe new life into  the segment.

Mexico has significant demand from its domestic market, and it also has free trade agreements with 44 countries to which Mexican petrochemical producers can export with no tariffs. Approximately 70% of the polyethylene currently used in the country is imported, which amounts to around 1.1 million tons per year, and around 90% of that comes from the US. This figure is expected to increase to 1.5 million tons by 2015. Geographical location of Mexico gives it easy access to the US market, which has a lot of potential. The technology is also available in Mexico to build cracker plants and develop projects under a very well groomed and experienced workforce for the petrochemical segment. All these elements bode well for the private sector, which is expected to play an important role in the revival of the Mexican petrochemical industry.

Braskem-Idesa Consortium

Etileno XXI Project (Image courtesy of www.chemicalsinfomart.com)

The involvement of private companies is already starting to compensate for the lack of investment from Pemex. One example of this is the Etileno XXI project, which was devised by both private and public sector stakeholders, as part of an effort to modernize the industrial production of petrochemicals. Brazilian Braskem and Mexican Grupo Idesa became involved during the early stages of the tendering process and are in the development stages of a project with sights on reviving the petrochemical segment in the country. The key objective behind the Braskem Idesa consortium, as its Director General, Roberto Bischoff, points out, is to guarantee enough volume of additional feedstock to launch new projects in the country. The plant’s location is seen as perfect, since it is being built in the south of Veracruz, in a small city called Nanchital, close to all three of Pemex’s petrochemical complexes in a radius of 20km. Etileno XXI will stand just a drive away from the Minatitlan refinery, allowing easy access to a consistent supply of feedstock for its operation. The project is currently under construction with an estimated completion date of 2015.

According to Roberto Bischoff, Mexico will continue to grow an annual rate of 3-4% and so will the market for polyethylene. This means that means that the production for Etileno XXI will become strategic in replacing imports, but will not eliminate them; imports are expected to play an important role in supplying the domestic market for the near future.

In another example of private sector involvement, the Pajaritos petrochemical complex will receive a capital injection of US$556 million from Mexichem production of vinyl chloride. This joint venture between Mexichem and Pemex is expected to reduce imports of this type of petrochemical from the US, contributing to the revival efforts for the segment. In the long term, Mexichem is planning to increase vinyl chloride production to a level where it not only satisfies domestic demand, but also allows for exports to the US and South America.

As Emilio Pescador Asaf, Director General and Mexico Country Manager at Technip, states, “private investment will generate a gradual increase in production and profitability of petrochemical activities. These joint efforts from the public and private sector hint at a brighter future for the Mexican petrochemical industry”. New Pemex Petrochemicals Director General, Manuel Sánchez Guzmán, has the support of Pemex’s main stakeholders to lead the Petrochemicals division to a greater future by overcoming the challenges of reviving the segment with the help of private investment.

Manuel Sánchez Guzmán graduated in civil engineering from Universidad Iberoamericana before completing his Masters in Science at Stanford University. His professional career started in 1974 in Grupo de Ingenieros Civiles Asociados (ICA – Group of Associated Civil Engineers) where he assumed various positions, including Financial Director of the Capital Goods division, iron industry Administration Director, Director of Operations, Corporate Finance Director and Director of Human Resources.

He joined Pemex in 2004 as advisor to the Board of Pemex Petrochemicals (Asesor de la Dirección General de Pemex Petroquímica) in order to improve the processes for inventory, unproductive assets, technology and public works. His valuable contribution led to his appointment as Studies and Projects Manager in 2008. From 2009 to November 2012 he held the post of Associate Director for Planning and was in charge of strategic planning for the subsidiary; administration and execution of investment projects; technological valuations for process optimization, and business development through strategic alliances.


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