Changes in the wind for Pemex petrochemicals

Mar 26, 2002 12:00 PM, Mary Davis, Associate Editor

The Petroleos Mexicanos (Pemex) petrochemical division is looking for some international alliances to join the Mexican company in a major production expansion. With the election of Vincente Fox to the Mexican presidency, Pemex gained an ardent supporter for reorganization, says Rafael Beverido Lomelin, the president of the petrochemical division. "This is a new world," he said. "This is a new challenge."

Lomelin discussed the reorganization during a session at the National Petrochemical & Refiners Association International Petrochemical Conference March 24-26 in San Antonio, Texas.

Pemex, long run by a governmental bureaucracy, now has executives from the private sector who are attempting to turn the company into a viable contender in the petrochemical industry after suffering a significant market share loss. To accomplish that, plans are on the drawing board to solicit investors, enlarge and improve current facilities, and construct new ones. In addition, the company's budget has received a federal infusion of $1 billion, the largest in 20 years.

Part of the reorganization includes forming a commercial arm, PMI, that will act on behalf of the Pemex petrochemical division. "We want to have only one face for the customer," Lomelin said at a news conference following his remarks at the meeting.

While the company is interested in forming alliances with various international companies, some of the new partners may come from Mexico, he said. Meanwhile, discussions have started with BASF to build a new styrene facility, but no decisions have been finalized. Investors in Brazil and Venezuela are also of interest to the Pemex division because of the two Latin American countries' consumption of petrochemicals.

Another change for the Pemex division would be the opportunity for international investors to own a small part of the newly-formed alliance, or 100%, or any percentage in between.

Lomelin acknowledged there are difficulties to overcome, not least the strong labor unions in Mexico. "We need to reshape, do something with the union," he said. Plans are to put a hold on hiring while using employees already on the payroll.

Success of the reorganization and investor solicitation should ease the $6 billion chemical trade deficit Mexico faces, and offer competition for the $8 billion in petrochemicals that are imported into the country annually.