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Peru Petrochemicals Report 2012
Business Monitor International, Nov 2011, Pages: 41
Business Monitor International's Peru Petrochemicals Report provides industry professionals and strategists, corporate analysts, petrochemical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Peru's petrochemicals industry.
Peru has enormous potential for the development of a competitive petrochemicals industry, but is unlikely to realise it until the Camisea gasfield is developed and the country’s pipeline network is expanded, according to BMI’s latest Peru Petrochemicals Report.
Peru’s massive gas resources, concentrated in the Camisea gas field, could support at least one worldscale 1mn tpa cracker and downstream production. The country is in a fairly unique position in South America with access to abundant ethane feedstock that could support low-cost petrochemicals production. This would put it at a distinct advantage compared to neighbouring states that are dependent on naphtha feedstock, which is susceptible to fluctuations in oil prices.
However, progress is slow due to lack of existing infrastructure and environmental approval for expanding gas production. The current investment focus is liquefaction for LNG exports and fertiliser production. Peru’s 400bcm of proven reserves are supporting annual production of around 9.2bcm in 2011. A world-scale cracker would require at least 1bcm of ethane feedstock and BMI believes that output needs to be ramped up to feed current domestic requirements in addition to the feedstock needs of a petrochemicals complex.
In 2011 Peru had no production capacity for basic petrochemicals such as ethylene, propylene or polymers such as PE, PP, PVC and PS. A small domestic market would mean any development of the petrochemical sector would have to be export-oriented. According to BMI forecasts, it is highly unlikely that Peru will see olefins and polyolefins capacity coming onstream in the next five years. The only development in this area is the proposed JV by PetroPeru and Brazil’s Petrobras and Braskem to create a facility that will produce 650,000-1mn tpa of PE. Braskem says its plans for studying investments in Peru remain in the MoU stage and by the end of 2011 had not advanced to the planning stage. The availability of related gas now appears to be even more attractive than it was when Braskem first started studying the project more than in 2009, Braskem says. However, the project has been pushed back by two years to at least 2016 as investors wait for an increase in gas supplies. BMI is mindful that past proposed petrochemical projects have not progressed and that some plants may not get off the drawing board.
Peru is devoid of olefins capacity and there is unlikely to be any improvement likely in the medium-term. As a result, the country is at the bottom of BMI’s Americas Petrochemicals Business Environment Ranking, 7.9 points behind Colombia. Nevertheless, the country’s massive gas reserves mean it has plenty of potential and BMI sees no reason why its score should not, in the long term and once economic fortunes are revived, improve markedly. Peru’s rating has risen 0.5 points since last year to 30.3 points due to an improvement in country risk.
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