Boston, MA -- (ReleaseWire) -- 12/31/2012 -- BMI's Venezuela Petrochemicals Report examines the enormous long-term potential of the local petrochemicals industry, but flags concerns about the impact of government policy on investment. The report examines the strengths and weaknesses of the Venezuelan petrochemicals industry and how producers are minimising investment risk. The report also analyses the growth and risk management strategies being employed by the leading players in the sector, as they seek to maximise the tremendous growth opportunities offered by local oil and gas reserves.
Progress on expansion of the Venezuelan petrochemicals industry has been slow and undermined by the government's policy in upstream sectors that provide feedstock and its general indifference to improving the investment climate. In 2012, Venezuela had ethylene capacity of 600,000tpa, propylene capacity of 400,000tpa, 450,000tpa of polyethylene (PE) capacity, 110,000tpa polypropylene (PP), 70,000tpa polystyrene (PS) and 130,000tpa poly vinyl chloride (PVC).
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Nevertheless, the country has significant competitive advantages that leave it well placed to increase global sales, even in the event of the anticipated slackening of the petrochemicals market. If realised, plans for refinery capacity expansion could provide an important source of naphtha feedstock for petrochemicals, but a poor business environment will militate against investment in downstream production.
BMI has changed the following views:
- Braskem has scaled back its joint ventures with PDVSA, postponing indefinitely a PE complex with capacities of 1.3mntpa ethylene plant and 1.1mntpa PE and scaling back a planned PP project from 450,000tpa to 300,000tpa over difficulties in securing feedstock and concerns over market health over the medium-term. As such, capacities are unlikely to change significantly over the coming five years.
- The indefinite postponement of the cracker also puts at risk plans for a fully integrated PVC complex, including chlor-alkali, vinyl chloride monomer and PVC units.
- In BMI's Latin America Petrochemicals Risk/Reward Ratings (RRRs), Venezuela comes in at eighth place with its score at 39.6 points, down 3.5 points from last year due to the fall in its petrochemicals market score due to the scaling back of medium-term projects and the deterioration in country risk with its long-term financial and institutional risk scores weakening. It is 10.0 points ahead of Peru and 3.6 points behind Colombia.
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