Petroperu, Braskem Plan Major Investment for New Petrochemical Site

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Petroperu (San Isidro, Peru), the national petrochemical company of Peru, and Braskem (NYSE:BAK) (Sao Paolo, Brazil) are planning the construction of a major petrochemical site in southern Peru. Both companies signed a memorandum of understanding at the end of 2011 to study the technical and economic feasibility of this project.

The complex is planned to be constructed in southern Peru, in the city of Ilo, in Moquegua state. Once operational, the new complex will process gas supplied through the Gasoducto Andino del Sur natural gas pipeline, which is planned to start its construction this year and will be executed by Odebrecht (Salvador, Brazil). The new petrochemical site will include an ethylene cracker, HDPE, LDPE and LLDPE as part of the polyethylene area. Furthermore, the possibility of building an aromatics area is being analyzed. This will be further defined in the upcoming months.

This major project will demand an investment of approximately $3 billion. How the shares will be divided between Petroperu and Braskem has yet to be defined, but both companies already are searching for investors. So far, six different international companies have shown interest in developing the petrochemical complex.

The construction of this major hub will have an important impact on Peru's economy, since it is expected to create 60,000 jobs, direct and indirect. Construction is scheduled to start in early 2016 in order to have the site operational by 2018.

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