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Spotlight

Pajaritos Complex

Wed, 01/22/2014 - 14:22

On July 30, 2013, the Official Journal of the Federation published the news that a significant part of the Pajaritos petrochemical complex would be removed from the public domain. It announced that 476,386m2 out of a total 990,528m2 in the complex would be leased, including the Clorados III plant in charge of producing chlorines and its derivatives. The news was received with mixed reactions as it was published just days prior to President Enrique Peña Nieto submitting his proposal for the Energy Reform. Critics attacked the initiative, perceiving it to be an aggressive step in the privatization of the oil sector before the pertinent reforms were even approved. However, the sale of almost half of the Pajaritos complex was intended to fulfill the commitments established by the Board of Directors of PEMEX headed by the Minister of Energy, Pedro Joaquín Coldwell.

In August 2013, PEMEX formed an alliance with Mexichem, a company specialized in chemicals and petrochemicals. A leader in the Latin American market, Mexichem has been operating for 50 years and has been listed on the Mexican Stock Exchange for more than half that time. PEMEX agreed to invest US$360 million while Mexichem committed US$200 million to a consortium named Petroquímica Mexicana de Vinilo (PMV). This consortium was formed with the objective of producing 400,000 tonnes of vinyl chloride, a component used to make polyvinyl chloride (PVC). Other activities include fluorite extraction and the production of sodium hypochlorite, sodium hydroxide, and hydrofluoric acid. 

Located in Coatzacoalcos, Pajaritos was the first petrochemical complex founded in Mexico 54 years ago. In 2003, US$2.5 billion were invested in its reconfiguration to optimize production by expanding the Clorados III plant. The goal was to increase production to 450,000 annual tonnes but in a disappointing turn of events, the production targets were not met. Journalists and analysis tried to explain the situation, speculating that the losses were the result of low investment in the sector. In 2013, 2.1% of PEMEX’s budget was assigned to PEMEX Petrochemicals and 1.62% to PEMEX Gas and Basic Petrochemicals. However, while the petrochemical market has an estimated sales potential of US$14 billion, PEMEX Petrochemicals has sales totaling only US1.5 billion. In 2013, the Pajaritos complex generated approximately US$347 million. This shows that, although the demand exists, Mexico is not living up to its potential on the supply side. This has enabled companies, such as Mexichem and the Brazilian-Mexican consortium BraskemIdesa, to grow exponentially and invest in petchem facilities.

Until these facilities are fully up and running, imports cover an important part of the country’s demand. As such, the sale of half of the Clorados III plant was seen as justified due to the lack of a legal impediment and the financial losses the complex was enduring.

During October 2013, ICA Fluor signed a contract with the Petroquímica Mexicana de Vinilo consortium to modernize the PVC plant at Pajaritos. ICA Fluor provides services in EPC operations and facility maintenance for the oil and gas, chemical, petrochemical, power generation, automotive, mining, and telecom industries. For the Pajaritos contract, ICA Fluor representatives have stated that their company will be in charge of EPC, maintenance, and project startup duties. It is believed that through these modernization works, the plant will finally be able to reach its goal of producing 450,000 tonnes per year.