Boston, MA -- (SBWire) -- 01/06/2014 --Petrochemical plants in Peru have been delayed by a lack of gas and infrastructure such as pipelines, says BMI's latest Peru Petrochemicals Report. Peru's significant commercially viable gas reserves, with ethane content at 10%, promise to drive growth in petrochemicals over the long term. However, the country has so far failed to leverage its potential and create a petrochemicals industry. Developing fertiliser production has been the first choice to add value to the country's natural gas production.
In 2013, Peru continued to possess no production capacity for basic petrochemicals such as ethylene, propylene or polymers such as PE, PP, PVC and PS. A small domestic market would mean any development of the petrochemical sector would have to be export-oriented. Peru's massive gas resources, concentrated in the Camisea gas field, could support at least one world-scale 1mn tpa cracker and downstream production. The country is in a fairly unique position in South America with access to abundant ethane feedstock that could support low-cost petrochemicals production. This would put it at a distinct advantage compared with neighbouring states that are dependent on naphtha feedstock, which is susceptible to fluctuations in oil prices.
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In addition to the competitiveness and marketability of a Peruvian petrochemicals industry is the priority of electricity generation, with many arguing for gas to be utilised for national development, rather than being exported.
BMI has the following forecasts/views:
- The development of a pipeline from the gas fields to a petrochemicals complex is crucial. Plans for a new southern pipeline, which would help supply domestic markets and connect with a yet-to-be built petrochemical and/or thermal project in the south of the country, have faced continued setbacks. There does not appear to be an imminent prospect of a breakthrough on this issue.
- Developing fertiliser production has been the first choice to add value to the country's natural gas production. Grupo Villar Mir subsidiary Fertiberia's plans for a US$2bn nitrogen fertiliser plant are underway, with completion expected in H217. The plant will export fertilisers to countries throughout Latin America and will produce up to 1.2mn tpa urea and 1.1mn tpa ammonia respectively. The urea lines will consume 700,000tpa of ammonia feedstock, leaving 400,000tpa of ammonia for export or, alternatively, to produce porous ammonium nitrate (PAN) for explosives.
- Peru's 400bcm of proven reserves are supporting annual production of around 12.3bcm in 2013. A worldscale cracker would require at least 1bcm of ethane feedstock and current output appears to support such a project. The key sticking point is pipeline infrastructure and the ability to overcome the strong challenge posed by new US capacity, fed by low-cost ethane derived from shale gas. We are projecting 14.8bcm of natural gas output in Peru by 2018.
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New Market Research Report: Peru Petrochemicals Report 2014
Fast Market Research recommends "Peru Petrochemicals Report 2014" from Business Monitor International, now available