Latin America needs to further develop its petrochemical industry
LARTC Advisory Board Meeting
Following the first key takeaway on the need for clear strategies to be put in place in order to decrease the region’s dependence on imports, here are the following key takeaways from the LARTC Advisory Board Meeting that took place in Buenos Aires, in February.
Key Takeaway 2: LATIN AMERICA NEEDS TO FURTHER DEVELOP ITS PETROCHEMICAL INDUSTRY
Many petrochemical producers across the world are now trying to diversify their product portfolio and adapt to new market conditions, but Latin America is still grappling with a lack of investment in their petrochemical industry and the region is a net importer of both feedstock and petrochemical products. One of the many difficulties comes from competing with the US market, which benefits from gas as a more competitive feedstock. However, there have been some interesting developments, with the new world-class scale Mexican petrochemical plant Etileno XXI showing positive outcomes since the update we heard at the last LARTC event in Mexico, and other countries also looking into expanding into petrochemical production.
“Strong competition from the US
was highlightedas one of the biggest challenges
for the region’s industry”
The region is juggling both fierce competition and higher quality standards
Refineries and petrochemical plants across the Latin American region need to concentrate efforts into increasing their operational efficiency and rethink what critical changes in the industrial configuration, supply, market and operational sides need to be made so as to remain profitable, competitive and above all sustainable in the long-term. Strong competition, mainly arising from the US and in some cases from Middle East and Asia, was highlighted as one of the biggest challenges for the region’s industry. US products flood the Latin American market as, in general, they are both of higher quality and lower production cost. The technology already in place in many Latin American refineries is inadequate and outdated and considering crude quality and demand product mix the industry needs to heavily invest in new capacity, new units and innovative technologies. This is especially true with today’s stronger environmental regulations and higher quality product specifications.
There are definitely many incentives for technology providers to target the Latin American market, as demand for processing capacity and innovative and efficient technology is high. For instance, if we look at the Argentinian market there is a positive outlook for investment, since it’s one of the few markets not operating under a NOC refining monopoly and with Vaca Muerta’s vast reserves, it’s clear that the full hydrocarbon processing potential of the country is yet to be reached.