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IHS predicts growth in Mexican petrochemical industry

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Hydrocarbon Engineering,

The recent opening of the Mexican upstream energy industry, combined with access to abundant US natural gas feedstock from Texas, is driving significant energy infrastructure investment on both sides of the border, according to recent IHS research. This infrastructure, along with planned access to more competitively priced electricity promised by the reforms, is breathing potential for new life into the Mexican petrochemical industry, which has long relied on imports to meet its domestic needs.

After 15 years of stagnation, with no new petrochemical production capacity installed in the country and several plant closures, the Mexican petrochemical industry has been overdue for investment and has had to rely heavily on raw material imports to meet its need for local production of many chemicals,” said Rina Quijada, Ph.D., Senior Director, Latin America, at IHS Chemical. “In 2014, Mexico imported nearly US$24.5 billion in chemicals and petrochemicals to meet its domestic needs, according to ANIQ, Mexico’s petrochemical industry association. However, for some chemical value chains, such as polyethylene, the import gap is more dramatic. Last year, Mexico had to import approximately 1.5 million t of this widely used plastic, which is about 75% of the country’s polyethylene demand,” she said.

New production capacity is expected to start up by the end of 2015, reducing import demand for PE in 2016, Quijada noted. This ethylene/polyethylene project, which is a joint venture effort between Brazilian based Braskem and Mexican based IDESA, is located in the state of Veracruz, and will use ethane as feedstock. “This new site should be highly competitive. Mexico needs more of this type investment, and we at IHS Chemical anticipate growth in production capacity of petrochemicals once additional feedstock is available in the next five to eight years,” said Quijada.

The changes in Mexico’s energy policy are already driving private investment in the energy infrastructure necessary to transport US natural gas to Mexico,” noted Quijada. “For Mexico, that gas means access to abundant, competitively priced feedstocks for petrochemical production. Just as important, it can be used for production of reliable, cost competitive electricity, which is absolutely essential to grow the entire manufacturing base in the country and to making Mexican petrochemical production cost competitive.”

Adapted from press release by Rosalie Starling

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