Petroperu, Braskem Put Peruvian Petrochemical Project On Hold

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Researched by Industrial Info Resources Latin America (Cordoba, Argentina)--Petroleos del Peru (Petroperu) (Lima, Peru) and Braskem S.A. (NYSE:BAK) (Sao Paolo, Brazil) have put on hold their plans to build a petrochemical complex in the city of Ilo in southern Peru.

After signing a memorandum of understanding in the fourth quarter of 2011, Petroperu and Braskem began feasibility studies for the construction of the complex. The companies initially planned to construct a complex for the integrated production of ethylene and polyethylene. A second stage of the project would include aromatics. Furthermore, Petroperu had intended to expand into the production of fertilizers, which is seen as a key sector for Peru.

Petroperu and Braskem postponed the project due to procrastination in building the Peruvian Gas Pipeline, which is managed by Peru's private investment development agency, ProInversion (Lima, Peru). Although the contract for the pipeline construction is expected to be awarded in June, it has yet to be determined if the natural gas pipeline would reach the city of Ilo and thereby supply feedstock to the petrochemical complex.

The petrochemical project would be reactivated no sooner than the second quarter of 2015, once there are guarantees for a natural gas supply for at least 15 years. Several petrochemical projects in Peru are experiencing delays. Many of these setbacks are closely related to gas supply and prices. Companies which have plans to invest in Peru are reviewing the situation due to lower natural gas prices in the U.S.

For related information, see July 30, 2013, article - Peru's Fertilizers Industry Development Under Review.

This situation is expected to stabilize in the upcoming months in order for investors to be able to continue with their plans for Peru's expansion in the petrochemical sector.

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