Prommex CEO: Economy Will Suffer if Petchem Projects Fall Through
Failure to complete as soon as possible petrochemicals projects such as Fénix will hurt the Mexican economy in coming years, Prommex International Trade chief executive Carlos Peña told BNamericas.
In early September President Vicente Fox announced the Fénix project, a joint venture between Canada's Nova Chemicals and Mexico's state oil company Pemex, would be downsized from US$2bn to US$840mn because the finance ministry would not approve discounts on raw material feedstock sought by potential investors.
Prommex International Trade is a Mexican company based in Santa Catarina, Nuevo León state, which distributes petrochemicals raw materials - mainly polyethylene and polypropylene - for the domestic plastics industry. The company has started to depend on imports of petrochemicals raw materials, from the US in particular, since Pemex cut its petrochemicals production, Peña said.
Peña said that when Prommex started operations in 1992, Pemex produced 65-70% of the petrochemicals raw materials for the domestic plastics industry, but at present Pemex only produces enough to satisfy 40% of demand for polyethylene in its different grades and has stopped producing polypropylene altogether.
Mexican businessmen from a variety of industrials sectors are worried that the slowdown in the petrochemicals industry will damage the country's ability to compete with countries like China and India, according to Peña.
The Prommex CEO said Arab countries are also expanding their petrochemicals infrastructure at surprising rates and accused Mexico's government of not having any real interest in this key sector of the global economy.
Peña expects the Mexican petrochemicals industry to slow down in 2006 as it is a presidential election year, although he said it should recover its pace in the following years if energy sector reforms can be completed before President Vicente Fox's administration ends in December 2006.
Mexico's economy and trade balance will be affected if the country continues to export crude oil and then imports it in the form of higher value-added products, Peña warned. Peña was speaking on the sidelines of the 25th annual meeting of the Latin American petrochemicals industry in Mexico City.
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