Brazilian firms plan petrochemical complex for Peru

Peru is tapping its natural resources to put itself on the petrochemical map. Its national oil company, Petroperú, has signed a memorandum of understanding with Brazilian counterpart Petrobras and Brazilian chemical giant Braskem to study the feasibility of building a new multi-billion-dollar complex based on domestically sourced ethane.

Braskem envisages a project that would produce between 700,000 and 1.2 million metric tons of polyethylene per year, start up in 2014, and cost about $2.5 billion. It would be the only large-scale petrochemical complex on the Pacific coast from Chile to Alaska. The partners are touting the unprecedented access the complex would open to markets throughout Latin America, the U.S., and Asia.

The feedstock for the plant would be natural gas from the newly developed Camisea Basin and from a field where Petrobras made a significant natural gas discovery earlier this year. Peruvian natural gas, Petroperú says, is relatively rich in ethane, which would be separated and cracked into ethylene. U.S. fertilizer maker CF Industries has been negotiating for access to Camisea Basin gas for an ammonia and urea complex.

According to Carlos A. Brenner, Braskem's international investment manager, the project doesn't change his company's other plans to expand outside of Brazil. In Venezuela, Braskem is planning polypropylene and polyethylene plants for 2011 and 2013, respectively, with state chemical firm Pequiven. Even a complex based on Bolivian natural gas "is still under evaluation," he says.

Jorge O. Bühler-Vidal, director of North Brunswick, N.J.-based Polyolefins Consulting, says Braskem should be able to pull off the financing and administration of the Peruvian project, given that it plans to complete the plant after those in Venezuela. "This is a pretty attractive project," he says.