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South America: Venezuela

12.01.2012  |  Quijada, R.,  IntelliChem, Inc., Coral Gables, Florida

Keywords: [petrochemicals] [refining] [natural gas] [economics] [trade]

Fig. 1 illustrates the annual gross domestic product (GDP) and inflation from 2006 to 2011 for Venezuela. High crude oil prices have helped domestic GDP growth, suggesting a healthy economy. 

  Fig. 1.  GPD and inflation rates for
  Venezuela, 2006–2011.

Despite the economic shocks that have rocked the global GDP since 2008, Latin America’s economic growth has remained above the world average. However, 2012 could be challenging in terms of growth. Inflation and stronger currencies in Latin America could slow economic expansion in the region. Most Latin American countries will experience the effects of higher energy prices and the likely recession in Western Europe, as well as the recovering-but-weak US economy.

Venezuela’s petrochemical industry has not grown significantly over the last few years. Since 2009, Venezuela has become more dependent on imported petrochemicals, including both basic petrochemicals (ethylene) and derivatives (polyethylenes).

Several expansion programs announced between 2005 and 2009 have been delayed or canceled. Meanwhile, the government, through PetroquÍmica de Venezuela (Pequiven), continues to develop a methane-based industry, and is increasing capacity for fertilizers and methanol production.

Political highlights. Since assuming the presidency in 1999, Hugo Chavez has survived a coup, an oil strike and protest movements against him. Of late, his most important battle has not been with the opposition party but with health issues.

Venezuela held presidential elections in October and reelected Chavez. New investments in the oil, energy and petrochemical industries continue to depend on the outcome of elections, thus underscoring the importance of Venezuela’s political environment on the domestic petrochemical industry.

Natural gas. Among the region’s major economies, Venezuela holds the largest natural gas reserves, as shown in Fig. 2. However, the lack of private investment has crippled the supply and growth of petrochemicals, primarily on the west coast of Venezuela. Planned expansion of ethane-based capacity at Jose, on the eastern coast of Venezuela, is all but canceled. Braskem and Pequiven were working on the Jose project from 2007 to 2010, but both companies are now looking into alternative feedstocks to support additional polyolefin capacity growth in Venezuela.

  Fig. 2.  Global natural gas reserves, 2010.

Petrochemical industry. Venezuela uses gas, associated with crude oil production, to produce ethane as a feedstock for petrochemical production. Lower crude oil production means reduced gas and ethane availability at El Tablazo (now called Campo Industrial Ana Mariá Campos or CIAMCA), where supply is now limited. Olefin plants at CIAMCA continue to operate at reduced rates due to inadequate ethane supply. Large capital investments and strong government support will be necessary to increase gas supplies.

Venezuela has four production sites for petrochemicals, as shown in Fig. 3. The largest petrochemical site is CIAMCA, located on the west coast. The Jose petrochemical site on the east coast of Venezuela will continue to produce methane derivatives such as ammonia, urea and methanol. The El Palito refinery is equipped with a reformer that feeds on condensates and produces benzene, toluene and xylene for local markets. The Morón facility is mainly for fertilizer production to supply local demand. It has important ammonia- and urea-producing units and produces other fertilizers, such as ammonium sulfate. Fig. 3 lists Venezuela’s present petrochemicals capacity for various base petrochemicals. 

  Fig. 3.  Locations of major refineries and
  petrochemical complexes, along with output
  and production capacities in Venezuela.

Pequiven is revamping the Moron petrochemical site to increase fertilizer production. There are also plans to increase feedstock availability at the CIAMCA petrochemical site. Pequiven is building a new ammonia plant to produce fertilizers at its petrochemical site in Morón, Carabobo State (21 km from Puerto Cabello). The new ammonia plant is part of Pequiven’s strategy to double its fertilizer production; Pequiven has just over 2 million tpy of ammonia capacity at the CIAMCA site and the FertiNitro plant in Jose.

Major changes in feedstock supplies are under evaluation at Pequiven. Venezuela could expand olefins and derivatives production through naphtha cracking or by tapping into refinery-rich streams from the Paraguaná refinery. Meanwhile, Pequiven is working to revamp existing facilities at CIAMCA and Morón.

Brazilian petrochemicals producers Braskem continues to evaluate Venezuela’s feedstock situation, looking to expand production capacity. Propilsur, the joint venture created by Pequiven and Braskem to produce polypropylene (PP) in Venezuela, is evaluating a propane dehydrogenation unit near the Paraguaná refinery where, Profalca, a local producer of polymer-grade propylene (PGP) has a splitter to upgrade refinery-grade propylene for PGP production. Meanwhile, Polinter is considering the construction of a naphtha cracker to increase ethylene and polyethylene capacity in Venezuela. Other basic petrochemicals, like aromatics and heavy olefins, will be exported from this site when the project is completed. This project would redirect naphthas currently exported as feedstock to supply a new, 800,000-tpy olefins cracker. New grassroot or large units are not anticipated to come onstream sooner than 2017. These units, when built, will be efficient, world-class facilities that will help supply olefins and polyolefins to this region. HP

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