Petrochemicals are the focus for ambitious expansion plans Mexico and Brazil are mapping big investments in petrochemical plants that would make them not only self-sufficient but give them a role in world markets
Latin America Earl V. Anderson C&EN, New York William P. Orr, president of Lummus Group, was speaking recently about the increase in construction of refineries and petrochemical plants that is expected to start around the middle of next year in areas outside North America and Western Europe. Most of the increase, Orr says, will occur in Latin America. And petrochemicals will continue to be the major source of new projects. At a recent meeting in Cancun, Mexico, SRI International's Juan Tampier said that Latin America, more than any other region, offers the best prospects for petrochemical development. Using lowdensity polyethylene as an example of Latin America's petrochemical potential, Tampier estimates that demand for the plastic in Latin American countries will grow 15% per year between 1976 arid 1981. In developed countries, that growth will be only 6% annually. Orr and Tampier are echoing what many other petrochemical experts have been saying for years. Latin America will
be where the petrochemical action is in the very near future. But until recently, those prophesies appeared to be just so much wishful thinking. For most Latin American countries, the climb out of the 1974-75 worldwide recession has been painfully slow. Figures compiled by the Inter-American Development Bank (IDB) make this unmistakably clear. Real gross domestic product grew an average of 4.5% last year in Latin America, less than the 4.8% in 1976. Both these increases are well below the brisk 7.2% average growth rate that the Latin American economy chalked up between 1968 and 1974. This year, however, economic improvement is the general rule for most of Latin America. Foreign exchange holdings are increasing. With few exceptions, Latin America's credit experience has been good. These improving economic conditions are expected to provide the launching pad from which the Latin American petrochemical industry can take off, as most observers have thought it eventually would. Of course, there is no such thing as a single Latin American petrochemical industry. The region is too heterogeneous. Economics, raw materials, and market potential vary widely from country to
Petrochemical needs of Brazil and Mexico are similar Demand, thousands of metric tons
Synthetic resins Synthetic elastomers Synthetic fibers Ethylene Propylene Butadiene Benzene Toluene Xylenes Methanol Ammonia
1977
742 205 233
— — 121
— 78 122 91
—
Brazil 1978
740 232 261 605 256 140 291 82 175 132 1022
Sources: Petroquisa, Mexican Petroleum Institute
42
C&EN Dec. 18,1978
1979
1977
837 253 284 682 287 154 320 90 196 154 1160
566 105 228 228 108 52 121 183 78 140 1028
Mexico 1978
650 118 264 336 113 59 124 207 93 152 1160
1979
740 132 308 494 163 65 126 216 95 162 1435
country. Excess capacity in one country doesn't necessarily fill capacity voids in another. Each has different problems. Each has different opportunities. Economically, three of the continent's countries stand out—Argentina, Brazil, and Mexico. They contain 65% of the region's population, account for 75% of its industrial production, and are the sites of 85% of its petrochemical industry. Brazil and Mexico, in particular, figure to become self-sufficient in most of their important petrochemical requirements. Ironically, they have entirely different raw material situations. Mexico is oil-rich. Brazil has to import most of its oil. The two engines that will pull Mexico into the petrochemical big league are its oil and improving economy. Inflation still is a problem there, but gross domestic product is expected to grow 5.8% this year, compared to a meager 3.2% last year. In 1979 economic growth is forecast at about 7.3%. Mexican president José Lopez Portillo recently announced that the country's proven reserves of oil and gas are 20 billion bbl (oil equivalent), up from 16 billion bbl a year ago. Probable reserves are an additional 37 billion bbl and possible reserves total 200 billion bbl. Just last month Petroleos Mexicanos (Pemex), the state-owned oil company, announced a major new oil discovery at Chicontepec containing about 100 billion bbl of oil and 40 trillion cu ft of natural gas. These raw materials should go a long way toward guaranteeing Mexico's plans for its petrochemical future. And make no mistake about it, that future will be orchestrated by Mexico. Pemex not only has a monopoly in petroleum production and refining, but by law also has a monopoly in basic and intermediate petrochemicals production. Private investment is permitted only in the so-called secondary petrochemicals sector and even that investment must have at least 60% Mexican participation. Mexico's petrochemical plans are ambitious. They call for increasing total capacity for producing primary (basic and
intermediate) and secondary petrochemicals from 12 million tons per year in 1977 to 27 million tons in 1982. Of that 15 million ton, 126% increase, 10 million tons will be in the primary sector. The remaining 5 million tons will be added to secondary petrochemical capacity. If Mexico's petrochemical industry achieves these goals, its share of the country's gross domestic product will rise from 1.7% last year to 3.8% in 1982. An important part of these petrochemical plans is the installation of capacity for a chain of ethylene derivatives and a variety of aromatics. One cornerstone of these plans is the 19-plant petrochemical complex now being built at Cangrejera. Included is a huge 500,000 ton-per-year ethylene plant that will add more new ethylene capacity than Mexico already has in four existing units. Plans for Mexico's secondary petrochemical sector will require an investment of nearly $500 million through 1982. But when those projects are completed, they will make attractive outlets for the large
volume of basic petrochemicals Mexico will be producing. For many intermediate products, Mexico will have more capacity than it needs to meet domestic demand. This will give the country an opportunity to export at competitive world prices. Pemex officials estimate that petrochemical exports will quadruple between 1977 and 1982, reaching a value of $250 million by then. Unlike Mexico's monopoly structure, Brazil's petrochemical industry combines government ownership with private Brazilian and foreign investment. Nevertheless, Petrobras Quimica S.A. (Petroquisa), a subsidiary of the government-owned petroleum company, Petrobras, is the exclusive government agency that develops and coordinates Brazil's petrochemical policy. Brazil is now starting up its second major petrochemical center (Copene) at Camacari, where eventually 30 separate production units will be on stream. Core of this complex is a cracker that will use
gas, naphtha, and gas oil to produce 400,000 tons per year of ethylene, other olefins, and aromatics. When all the units are operating, Copene will turn out 2.3 million tons per year of products. To meet future demand, Brazil is building a third petrochemical complex (Copesul) at Porto Alegre. The Copesul cracker will be Petroquisa's responsibility. Downstream units will be built by both domestic and foreign private investment. Some of the units there may begin operating in about 1982. Its size will be impressive—420,000 tons per year of ethylene and aromatics, 120,000 tons per year of benzene. Seven downstream units will produce 680,000 tons of ethylene derivatives annually. The Brazilian petrochemical industry likely will continue to grow on the strength of its two new petrochemical complexes at Copene and Copesul. However, that growth won't be so rapid as it was during the early 1970's, when Petroquimica Uniâo at Sâo Paulo was Brazil's only major petrochemical complex.
Demand for petrochemicals likely to grow fast in major Latin American countries Demand index, 1978 = 100
Demand index, 1978 = 100
Demand index, 1978 - 100
300
3001
3001
Mexico
Argentina
250
Brazil
250
/ 9ΩΠ c\J\)
200
/
150
mn
ι
S\
1978
79
80
i i 81
82
ι
ι
83
84
85
1978
79
80
81
84
85
1978
79
80
81
82
83
84
85
Sources: Mexican Petroleum Institute. Ca'mara de la Industrie Quimica. Petroquisa
Dec. 18, 1978 C&EN
43
Between 1970 and 1975, petrochemical demand in Brazil increased a hefty 24% per year. Brazil accounted for 40% of Latin American petrochemical output, making it the region's largest producer. But Brazil's domestic petrochemical demand won't be able to maintain that pace; it is expected to average about 15% per year over the next few years. And Brazil, like Mexico, will be eyeing export markets for some of its excess petrochemical capacity. But Brazil will have to take second place, behind Mexico, as a ranking Latin American petrochemical producer. Brazil's big problem is a lack of oil and natural gas for petrochemical raw materials. Petrobrâs has an extensive explo-
ration program under way, particularly offshore near Campos. Meanwhile, Brazil's well-publicized gasohol program, by which the country hopes to add 20% ethanol to all of its gasoline, could help the petrochemical feedstock problem in two ways. First, it could reduce the volume of naphtha required for gasoline, making it available as petrochemical feedstock. And some of the agriculturally derived ethanol could also be used as feedstock. An ethanol-based ethylene unit with a capacity of 60,000 tons per year is expected to be operating by 1980. In Argentina, political instability, coupled with the 1974-75 recession, put a crimp in economic growth. Now, the Argentine economy seems to be on the road to recovery. But it still has a long way to go. The inflation rate has been running about 170% a year, despite tight monetary policies adopted late last year. These policies brought a sharp decline to economic activity in the first quarter of 1978. Production has picked up since then, but it is unlikely that Argentina's gross national product will exceed last year's level. Nevertheless, Argentina has high hopes that its new industrial promotion law will
increase production and productivity, attract both foreign and local investment, and accelerate industrial growth. The sectoral decree dealing specifically with the petrochemical industry hasn't been written yet. But when it is, it is almost certain to establish minimum plant capacity and set prices for petrochemical raw materials. If Argentina's economy responds the way it is expected to, long-delayed projects may finally be completed. For instance, Petroquimica Gral. Mosconi may finish its 200,000 ton-per-year ethylene plant and downstream complex at Ensenada by 1982. At Bahia Blanca, an ethane cracking plant completed since 1976 has not been operating because it has had no feedstock nor much of an outlet for its ethylene. Now, plans call for an ethane separation unit to be completed at Bahia Blanca by 1981. Three downstream units (for lowand high-density polyethylene and vinyl chloride) also are scheduled to be on stream by 1981, making it possible for the 120,000 ton-per-year cracker to start up. The Argentine chemical industry can use these units. According to recent estimates, domestic petrochemical demand may more than double by 1985. D Continued on page 51
Brazil, Mexico, and Argentina are becoming important petrochemical producers Production, thousands of metric tons
CHEMICALS Ammonia Benzene Butadiene Ethylbenzene Ethylene
1974
Argentina 1975 1976
69.0 70.1 30.3
69.0 98.5 23.7
—
Brazil 1977
1974
1975
1976
1977
1974
69.0 131.0 24.0
55.9 114.4 21.6
—
—
44.3
201.0 100.1 61.4 54.0 294.5
171.0 121.2 81.2 65.7 349.4
194.0 145.0 80.7 67.4 362.0
525.4 97.1
—
203.6 122.2 63.2 56.1 269.5
20.4 26.3 112.3 47.8 47.1
15.5 28.3 125.1 59.8 63.5
1977
37.7 177.7
801.2 90.0 22.0 26.9 213.0
864.8 99.2 18.6 33.7 227.9
943.8 74.5 23.3 31.7 229.9
20.0 31.1 117.8 84.0 71.1
25.6 22.6 30.4 30.0
44.9 27.3 32.6 31.6
—
—
42.1 24.5 39.6 32.2 10.5
49.2 26.8 42.4 33.1 13.6
—
41.8
43.0
51.0
Ethylene glycol Ethylene oxide Formaldehyde Methanol Phenol
— —
— —
— —
— —
45.5 35.9 8.4
53.5 31.1 8.2
44.0 33.0 8.8
45.6 32.7 9.3
18.3 19.6 125.7 52.9 50.5
Phthalic anhydride Propylene Styrene Toluene Urea
14.3 13.5 31.2 26.4 36.7
14.5 8.2 32.2 22.6 34.0
17.1 6.6 35.7 19.0 37.7
21.5 7.2 37.8 26.7 47.2
31.8 96.0 51.1 37.6 77.8
27.2 114.1 49.1 55.2 77.6
36.4 94.4 61.8 52.9 30.2
36.0 139.0 64.0 67.6 20.5
17.7 92.3 29.7 118.5 154.6
13.3 93.0 27.4 116.0 154.5
21.2 113.6 34.9 132.3 161.4
21.1 137.5 36.4 116.3 179.1
Vinyl chloride Xylenes
37.9 21.5
32.3 38.7
34.4 48.6
41.0 52.7
97.9 48.1
109.4 37.2
105.5 49.1
108.2 70.0
50.3 57.1
44.6 52.1
60.2 66.4
55.7 62.3
PLASTICS Polyethylene, high density Polyethylene, low density Polystyrene Polyvinyl chloride
—
—
—
—
53.6 200.0 88.2 162.0
—
32.5 19.2 37.8
44.4 188.5 85.4 152.3
—
28.1 21.2 32.8
33.1 159.3 67.8 136.7
—
26.3 26.3 30.8
27.5 158.5 52.4 106.0
—
28.9 22.9 36.1
89.3 30.0 49.5
99.3 38.4 49.6
93.7 41.6 67.2
95.0 48.7 65.6
— — — —
— — — —
— — — —
— — — —
12.8 66.6 56.8 57.3
12.4 48.3 64.7 51.4
14.6 55.2 75.7 51.7
16.0 60.6 83.1 66.7
23.8 29.5 74.5 22.1
29.1 29.3 95.4 21.4
35.8 36.2 90.3 22.0
38.0 37.6 109.5 22.0
51.9
39.3
40.7
36.6
121.5
96.2
127.8
140.9
38.9
44.5
51.5
46.5
SYNTHETIC FIBERS Acrylics Nylon Polyester Rayon SBR elastomers
Sources: Câmara de la Industrie Quimica, Petroquisa, Mexican Petroleum Institute
44
Mexico 1975 1976
C&ENDec. 18,1978
