Three Mexican pertrohemical companies, plus Brazilian heavyweight Braskem SA, has yet to agree to a price with state oil company PetrÃ³leos Mexicanos (Pemex) for the ethane feedstock required for a $1 billion ethylene cracker that the quartet wants to build on Mexico's Gulf Coast.
We are doing all the analysis, but at this moment we have not sent any offer to Pemex, Enrique Ortega, investor relations director of PVC and specialty chemicals maker Mexichem SAB de CV, said Sept. 3.
Mexichem is one of the three Mexican companies that formed the consortium last year. The others are Grupo Idesa SA de CV and Alpek SA de CV, a subsidiary of Mexico's publicly owned Alfa Group.
Ortega confirmed that São Paulo-based Braskem SA, Latin America's largest petrochemical company, has since joined the trio as a partner. Many observers believe Braskem's participation improves the chances of the project taking off.
According to Ortega, the consortium is the only interested party left in the long process of sealing a long-term feedstock deal with Pemex Gas, a condition set by the Mexican government in early 2008 before it will authorize the cracker's construction.
Pemex agreed in April to extend until the end of this month the limit for feedstock offers to be submitted. A Pemex spokeswoman said that an announcement is likely before the end of the month.
We have to make an offer to them but it's difficult to say when that'll be, Ortega said.
He said the cracker would take three years to build and Mexichem's share of the $1 billion price tag would be $250 million.
The sum would be in addition to the $1 billion that Mexichem announced in late 2007 it would invest in expanding its operations in the Americas over five years, he added.
If plans for additional production facilities proceed, a further $2 billion investment will be needed, he said.
Asked why Mexichem is interested in building the ethylene cracker, Ortega replied: We need ethylene and chlorine for the PVC we manufacture. We already produce the chlorine.
The missing element is ethylene, he said.
According to Carlos Pani, deputy commercial director of Pemex Petroquímica which would not be involved in the project whatsoever the facility would produce 2.2 billion pounds of ethylene per year.
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