Venezuela Petrochemicals Report 2008

Industry Overview As one of the largest oil and gas producers in the world, Venezuela holds immense potential to develop a thriving petrochemicals industry. The Venezuelan chemicals and petrochemicals industry currently comprises about 300 companies. The country enjoys a competitive advantage in olefins and derivatives, fertilisers and oxygenates. Most key sectors of the economy are currently state controlled. The government is carrying out a major nationalisation drive and has taken control of most privately run oil projects in the country. The major players in the domestic petrochemicals industry are: Petroleos de Venezuela (PdVSA), Petroqumica de Venezuela (Pequiven) and Propilven de Venezuela (Propilven).

Government Initiatives The Venezuelan petrochemicals industry has been steadily evolving and continues to be in a restructuring phase. A new petrochemicals law, which is likely to be introduced for discussion before the close of 2007, could significantly alter the extent of private participation in the industry. The government hopes to increase investment and employment in the industry with the introduction of the new law.

Industry Developments One of the largest petrochemicals projects on the anvil involves development of an integrated petrochemical facility at the Jose Petrochemicals Complex. The project will be jointly undertaken by Pequiven and Brazilian chemical giant Braskem. Total cost of the project, excluding the development of allied infrastructure in the region, is likely to be in the vicinity of US$2.8bn. In July 2007, Pequivens new polyvinyl chloride (PVC) kits manufacturing plant was inaugurated in Carabobo. During the same month, plans were unveiled for the development of a new refinery-streams project at Centro Refinacion Paraguana. Plastics and resins that are currently not manufactured in the country will be produced at this facility. Further, Iran and Venezuela have entered into a pact for methanol production, under which at least one methanol plant will be constructed in each country.

Industry Forecast Venezuelas President Hugo Chavez has outlined major plans for expansion of the countrys petrochemicals industry. The plans envisage raising the industrys annual revenues to about US$100bn within the next five years, and the creation of nearly 700,000 jobs within the industry by 2013.