BUSINESS
BIG PETROCHEMICAL PLANS Latin America, and Brazil in particular, is seeing no shortage of CHEMICAL PROJECTS in the works LATIN AMERICA, particularly its largest economy, Brazil, is on a path of development, and the chemical sector is a crucial element in that progress. Outside the Middle East and Asia, no other region is seeing more dramatic growth in its chemical industry. Delegates from the industry gathered last month at Hotel Sofitel Rio de Janeiro for the 26th annual meeting of the Latin American Chemical & Petrochemical Association (APLA) to discuss these changes to their region. Perhaps one measure of the increasing interest in the region's chemical industryis the growing number of attendees at the APLA meeting. Some 738 delegates attended, a 17% increase from the 2005 meeting, held in Mexico City. The Mexico meeting, however, had been planned for Cancun until Hurricane Wilma struck just weeks before, forcing it to be relocated at the last minute. About 5% of the delegates weren't able to change their itineraries. Rio is also home to Brazil's state oil company, Petrobras, and the company's president, Jose Sergio Gabrielli de Azevedo, addressed the gathering about Petrobras' growing involvement in the Brazilian chemical sector. Petrobras, Gabrielli said, is planning $3.3 billion of investments in the petrochemical industry by 2012. He sees Petrobras' role as unlocking synergies between oil refining and petrochemical production, as Shell and ExxonMobil have done, while fostering the private chemical sector in the country. "The idea is that we go a little bit downstream so we can integrate from the refineries up to the polymers stage," he said. Case in point is Comperj, an $8.3 billion integrated chemical complex planned for 2012 for the state of Rio de Janeiro. The project involves Petrobras; Grupo Ultra, the parent of Brazilian ethylene oxide maker Oxiteno; and the Brazilian development bank BNDES. The complex is to process heavy oil from the nearby offshore Campos Basin and transform it into petrochemicals. The basic chemicals complex will pro-
duce 1.3 million metric tons of ethylene, 900,000 metric tons of propylene, and 1.3 million metric tons of aromatics. Downstream from the basic chemicals facility, private partners are envisaged to build plants for polyethylene, polypropylene, styrene, ethylene glycol, polyethylene terephthalate, and other derivatives. Gabrielli expects the basic chemicals plant to cost about $5.2 billion and the downstream units to cost a total of about $3.1 billion. THE BRAZILIAN petrochemical industry has never seen a project so big. And some attendees were skeptical about the timing of the project and how much of the bill would need to be footed by the deep-pocketed Petrobras. Some observers believe 2015 maybe a more reasonable start-up date than 2012. But the Brazilian industry has been successful in completing one large petrochemical project in the state of Rio de Janeiro based on locally produced hydrocarbons. Rio Polimeros—a $1.1 billion ethylene and polyethylene joint venture of Petrobras, BNDES, and the local petrochemical groups Suzano Petroquimica and Unipar— started up in late 2005. In addition to Comperj, Petrobras is also considering building a 160,000-metric-ton acrylic acid plant in the state of Minas Gerais with Brazilian specialty chemical company Elekeiroz. Dow Chemical dropped out of the study for this plant, which would make the raw material for superabsorbent polymers, late last year. Petrobras is also planning a polypropylene joint venture in the state of Sao Paulo with Braskem. Not only the Petrobras projects were on people's minds at the APLA meeting, so were the large petrochemical projects in the Middle East that may cause the
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next downturn in the petrochemical cycle around the end of the decade. George M. Intille, a vice president of SRI Consulting, told the audience that companies in the Middle East are planning 23 million metric tons of new ethylene capacity, about 45% of the planned global total, to come onstream between now and 2015, mostly between 2010 and 2012.
Intille, however, is optimistic that these new ethylene steam crackers will not start up all at once because resources such as labor just aren't sufficient. "Some of the steam crackers will be delayed because they are not sustainable on a human level; there is just too much going on," he said. As a result, the next downturn will not be as severe as the 2002-03 trough, he added, but it might last a little longer. Intille warned that energy prices over the next petrochemical downturn will likely climb even higher than they are today. He pointed out that major oil companies such as Shell and BP have been decreasing their petroleum reserve estimates and that new oil discoveries have not kept pace with consumption. "For 30 years, we have been using half a trillion barrels more per year than we have been finding," he said. At the APLA meeting, there was interest in more than just the same old oil- and gas-based petrochemicals. For the first time, there was considerable talk of alternative fuels as well. Jose Luiz Oliverio, senior vice president of operations at the Brazilian sugarcane process equipment manufacturer Dedini, spoke of Brazil's dramatic rise in ethanol production from sugarcane. He said the country's sugar-to-alcohol mills converted 386 million metric tons of sugarcane into alcohol in 2004, and he expects that figure to climb to 570 million metric tons by 2010. One metric ton of sugarcane yields a little more than half a barrel of hydrate d ethanol. Ethanol is showing more signs of becoming mainstream, Oliverio said, pointing to a plan by PDVSA, Venezuela's state oil company, to produce 25,000 barrels per day of ethanol based on sugarcane in Venezuela. "This is the beginning of a new cycle where the oil-energy companies are starting to produce bioenergy," he said.—ALEX TULLO
