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Petrochemicals in Mexico

Hydrocarbon Engineering,

A new report from BMI examines the enormous long term feedstock potential provided by shale gas in Mexico. However, the report also warns of a risk of a contraction in output this year if the US economy does not bounce back. The report examines how leading operators are responding to the government’s desire to rapidly ramp up capacities across the value chain over the next 15 years via the involvement of the private sector and in particular overseas firms. The report also looks at forthcoming projects and their contribution to ambitions long term targets.

A look at 2012
Last year, Mexico’s olefins capacity included 1.58 million tpa of ethylene and 660 000 tpa of propylene. These fed downstream capacities of 857 000 tpa of polyethylene, 590 000 tpa of polypropylene, 667 000 tpa of PVC and 310 000 tpa of polystyrene. Yet, it is widely recognised that these capacities are not enough to meet domestic demand, let alone allow Mexico to take full advantage of its strategic position as a supplier to the US market. The country’s petrochemical output has suffered due to the effects of the global economic downturn, despite a relatively stable domestic market. Pemex, the country’s dominant oil, gas and petrochemicals producer has said that its petrochemicals output declined 13.4% year on year to 7.38 million t in the first eight months of last year, falling 6.1% year on year to 12.38 t in 2011.

Mexico’s goals
The country is now aiming to increase total petrochemicals production from approximately 9 million tpa in 2011 to 22.6 million tpa in 2026. 15% of this anticipated increase will come from Braskem’s Ethylene XXI project. The goal does however rely heavily on full development of shale gas reserves, as well as a reliable source of raw materials and greater private sector participation. Mexichem is now in the process of diversifying its revenue streams and in 2012 was in negotiations with Occidental Petroleum over building a US$ 1 billion ethylene facility. A joint venture with Pemex is also on the cards, and is expected to have a capacity of 400 00 tpa of vinyl chloride monomer.

Views and forecasts

  • Reducing dependence on imports is only likely once the Ethylene XXI project, based on 1.05 million tpa ethylene capacity, 750 000 tpa high density polyethylene and 300 000 tpa low density polyethylene capacities, moves into commercial operation in 2015.
  • Mexico will remain a net importer of polymers over the long term, as its burgeoning manufacturing sector requires greater amounts of plastic.
  • In BMI’s Americas Petrochemicals Risk/Reward Ratings, Mexico is in fourth place with a score of 61.8 points, up 2.1 points due to an improvement in both petrochemicals market and country risk scores.

Adapted from press release by Claira Lloyd

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