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Business

Ambitious Plans

Oxiteno CEO will take charge of its parent company and its expansion program

by Alexander H. Tullo
December 11, 2006 | A version of this story appeared in Volume 84, Issue 50

On Jan. 1, Pedro Wongtschowski's role in the Brazilian chemical industry will become even bigger. Now head of Oxiteno, the only Brazilian producer of ethylene oxide and its key derivatives as well as specialty chemicals and oxygenated solvents, he will move upstairs to take the reigns of Ultrapar Participações (Ultra), Oxiteno's parent.

In this capacity, Wongtschowski will succeed Paulo G. A. Cunha, the longtime chief executive officer of Ultra, which owns Oxiteno, the liquefied petroleum gas distributor Ultragaz, and the chemical and fuels logistics company Ultracargo. Wongtschowski will also continue to oversee—if not take a more decisive role in—Oxiteno's internationalization and its various expansion projects, including participation in a massive petrochemical complex under study for the state of Rio de Janeiro.

Dubbed Comperj and planned for 2012 in ItaboraÍ, Rio de Janeiro, the project is the most ambitious ever contemplated in Latin America. It would be one of the world's few oil refineries focused on making petrochemicals instead of fuels.

The partners in the study—Ultra, the state oil company Petrobras, and the development bank BNDES—are planning a facility that uses catalytic cracking technology to convert 150,000 barrels per day of heavy crude into 1.3 million metric tons annually of ethylene, 900,000 metric tons of propylene, 1.3 million metric tons of aromatics, and 200,000 metric tons of butadiene. The combined price tag for the complex is expected to be $5.2 billion.

There are plans for $3.1 billion in chemical derivatives plants making polyethylene, polypropylene, ethylene oxide (EO), styrene, and purified terephthalic acid downstream from the facility.

Oxiteno would construct the EO unit, which Wongtschowski says would probably have 400,000 metric tons per year of capacity. He says Oxiteno would likely use EO to make ethylene glycol, ethanolamines, and surfactants. "We have some time to fine-tune the derivatives on that site, so we have not yet decided precisely what we are going to do with the EO," he notes.

After four years of work, the feasibility study for the project is nearly complete, Wongtschowski says. Details yet to be worked out include the ownership structure of the basic chemicals unit and which companies will build the downstream plants.

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Credit: Oxiteno
Wongtschowski
Credit: Oxiteno
Wongtschowski

"Now that we have the study basically completed, we are working on what will be the final arrangement," he says.

Although the economics of building a refinery without producing a significant amount of fuel might seem dicey, Wongtschowski says feeding the complex with low-value crude makes the project worthwhile. "The economics are looking quite good because you are using as your raw material relatively inexpensive oil: very heavy crude," he says.

Wongtschowski says he isn't worried about the cost of the project. Ultra's sales last year were about $1.9 billion, of which Oxiteno contributed $661 million. The company has a strong balance sheet; its cash reserves exceed its long-term financing. "Resources don't seem to be our major problem at this point," he says. "If you have a good project and you have a sound company, you get the money that you need."

Outside observers have been positive. Rina Quijada, a Latin American chemical consultant with Coral Gables, Fla.-based IntelliChem, says it is a little too early to make a final judgment, although she thinks the concept is sound. "Petrobras is certainly behind it, and it has political support," she adds.

Quijada expects, however, that the project will likely start up "no sooner than 2015," because of its massive scale and its new technology and because that date might be a better point in the global petrochemical cycle.

While it bides its time on the megaproject, Oxiteno is spending $320 million on other expansions in EO and downstream surfactants. Wongtschowski says his company is uniquely beholden to the market: "Being the sole Brazilian producer of EO and most of its derivatives, we have a responsibility to keep the market properly supplied," he says.

Oxiteno has signed a contract with local company Braskem for the additional ethylene required to supply a new 90,000-metric-ton EO reactor planned for its site in Camaçari, Bahia, by late 2008. At the same time, Oxiteno is expanding ethoxylation capacity there by 70,000 metric tons. In early 2008, it will start up a new EO reactor in Mauá that will expand its capacity by 50,000 metric tons. Downstream, it is adding another 70,000 metric tons of ethoxylation capacity.

In Camaçari, the company is also planning Latin America's first fatty alcohol plant. Slated for completion next year, the plant will have capacity for 80,000 metric tons of fatty alcohols plus glycerin coproduct. Wongtschowski says the output will replace fatty alcohols that the company currently imports for its sulfation and ethoxylation plants.

Oxiteno will feed the new unit with palm-kernel oil. "Most of our requirements will be imported, at least for the time being," Wongtschowski says. Brazil is a minor palm-growing country, but he says Oxiteno and some state governments in Brazil are fostering increased palm cultivation, particularly in Bahia and Pará. "We expect that over time, part of our needs will be supplied by locally produced product," he says.

And Ultra is deepening its interest in renewable raw materials. The company, together with BNDES and a São Paulo state R&D fund called FAPESP, is inaugurating a $3 million program next year to fund university and research center projects on producing chemicals from sugarcane, sugar, and alcohol. "That is something unique in Brazil: two government agencies and a private company coming together to ask Brazilian universities to work on R&D projects of interest to the industry," Wongtschowski says.

Oxiteno has also been on the acquisition path. The company participated in the bidding for ICI's Uniqema oleochemicals and surfactants business, which had $1.1 billion in 2005 sales. The small British specialty chemicals firm Croda snapped up the unit earlier this year for $740 million.

Otherwise, Wongtschowski is close-mouthed about Oxiteno's acquisition plans. "We are considering some acquisitions at this point. Period," he tells C&EN. Instead, he points to the company's success with its purchases of two small Mexican surfactants firms, Canamex in 2003 and Rhodia Especialidades in 2004. Oxiteno's Mexican operations, he boasts, doubled in size in the subsequent two years.

Whatever the acquisition, Wongtschowski says it won't be a departure, in terms of chemistry, for the historically conservative Oxiteno. "We intend to stick to the chemistry we know," he says.

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