Recent Study: Venezuela Petrochemicals Report 2014

From: Fast Market Research, Inc.
Published: Tue Feb 04 2014

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, according to BMI's latest Venezuela Petrochemicals Report.

In recent years, polymer shortages have had a deleterious impact on the Venezuelan market. Beset with operational problems and lacking capacity to satisfy local demand, Pequiven has increasingly had to rely on imports to fill the gap, causing more exposure to international price shifts. Reliance on imports has also raised the price of resin supplies for transformers, undercutting their margins and therefore their competitiveness, with Venezuelan plastics transformers paying the highest PE prices in the region. In some circumstances, this has prompted a switch from LDPE to LLDPE. In 2013, the main story was the tight local PVC market due to insufficient local production and constraints on imports, exacerbated by currency controls.

Full Report Details at

Venezuela will be unable to move towards self-sufficiency under the current business environment in which the government has assumed a high degree of managerial control and intervention in the economy. There were high hopes that strong projected growth in oil and gas output would support investment in the petrochemicals industry. The government had envisaged that a tie-up between state-owned Pequiven and Brazil's Braskem would stimulate expansion. However, by 2014 it was obvious that the relationship between the two had broken down and plans have been abandoned. In part, this was due to the poor business climate as well as the rapid development of US petrochemicals capacity on the back of shale gas exploitation.

BMI makes the following observations:

* Petroleos de Venezuela (PDVSA) plans to invest around US$24bn (€18bn) in refining projects between 2013 and 2019, including plans to activate its first petrochemical plant at the Paraguana Refining Complex (CRP) in 2018. The plant will capitalise on oil-based feedstock from the CRP's integrated refinery system, which includes the Amuay, Cardon and Bajo Grande refineries. The project will be developed by Propilsur - a joint venture between Pequiven, the petrochemical arm of PDVSA, and Brazilian polymers major Braskem.
* With doubts hanging over the future of petrochemicals expansion, the local market will be reliant on imports to satisfy demand. The market will remain lacklustre over the medium term, with growth trends pointing downwards, particularly in petrochemicals-intensive sectors such as construction and manufacturing. While these sectors are set to come out of the decline seen in 2013, growth levels will be insufficient to return the market to its former strength.

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