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Braskem-Pequiven evaluate new models for petrochem projects
03
May '10
BRASKEM S.A., the leading resin producer in the Americas, and Pequiven have decided to evaluate a new model for their petrochemical projects in Venezuela through the joint ventures Propilsur and Polimerica in order to adjust the project characteristics to the new reality in the international market. A memorandum of understanding to this effect was signed in Brasília, during a meeting between the presidents of Brazil and Venezuela, Luiz Inácio Lula da Silva and Hugo Chávez. The main changes should occur in the polypropylene industrial unit project under the responsibilityof Propilsur, with changes in the site and scale, which would allow for maintaining the project's timetable and reducing the investment required by approximately 60%.

The original Propilsur project provided for the installation of a propane dehydrogenation unit, which transforms this product into the feedstock propylene, integrated with a polypropylene plant with capacity of 450 kton/year, which would be built at the Jose Industrial Complex in the state of Anzoátegui.

In view of the contraction in international credit markets since the onset of the crisis in early 2008, and the high costs of the original project, which are estimated at US$1.0 billion, in December 2009, the Venezuelan state-owned oil company PDVSA presented an alternative feedstock source, the Paraguaná Refinery Complex in the state of Falcón. In view of this proposal, Pequiven and Braskem agreed to evaluate changing the site of the polypropylene plant.

The feedstock supplied by PDVSA should be enough to build a polypropylene plant with capacity of 300 kton/year, eliminating the need for investment in an intermediate propane dehydrogenation unit. Accordingly, the total investment is expected to decrease to approximately US$ 500 million, facilitating the contracting of finance. Studies of the new configuration for the Propilsur project will begin in 15 days, with the plant still expected to start up operations in 2013, provided the conditions proposed by Pequiven, PDVSA and the Venezuelan government are ultimately confirmed.

In view of the new configuration and site change for the polypropylene project, and given the possibility of the future supply of ethane gas and/or other feedstock sources coming from PDVSA's Refinery Complex in Paraguaná, Pequiven and Braskem also agreed to postpone for one year the developments related to the Polimerica project, which initially was planned for the Jose Industrial Complex. The project envisages the construction of three polyethylene production units with combined production capacity of 1,100 kton/year, integrated with an ethylene production unit with capacity of 1,300 kton/year, for investment of approximately US$3 billion.

This postponement will allow for evaluating the conditions and possibility for supplying the feedstock for this project through the Paraguaná Complex, since this could prove more competitive than the initial option. If this decision were in fact to prevail, the units could start up operations by early 2015.

At the meeting of the heads of state held, an addendum was also signed to the agreement for the supply of naphtha by PDVSA to Braskem, which expanded the term for a further two years and increased the volume supplied from 640,000 ton/year to approximately 1 million ton/year. A memorandum of understanding was also formalized for the supply by Braskem of resins and basic petrochemicals to Pequiven.

BRASKEM S.A.

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