Bolivia plans $1.8-billion petrochemical complex

19:34 PM | June 2, 2014 | —Francinia Protti-Alvarez

Morales: Announces petchem project.

Bolivian president Evo Morales has announced plans for a $1.8-billion petrochemical plant in the department of Tarija, in southern Bolivia. The area has the largest proven natural gas deposits in the country and the second largest in South America.

The project, based on a conceptual engineering study by Tecnimont, is for the development of a complex that will produce ethylene, polyethylene (PE), propylene, and polypropylene (PP). “There are two polyolefins projects in Yacimientos Petrolíferos Fiscales Bolivianos's [(YPFB; La Paz)] strategic plan: a propane dehydrogenation–PP plant with a capacity of 300,000 m.t./year, slated for start-up in 2018—I believe this is the announcement that was made by President Evo Morales and YPFB President Carlos Villegas—and an ethylene-PE plant that is planned to be built in the same site, but in 2022. The capacity for the ethylene plant has previously been mentioned to be around 600,000 m.t./year,” says Jesse Tijerina, consulting director at IHS Chemical. “A natural gas liquids [(NGLs)] plant currently being built in Gran Chaco is expected to supply the Tajira projects. YPFB has cost-advantaged feedstock, such that it can overcome the somewhat higher costs of getting the product to the major markets in South America,” Tijerina says.

State-owned YPFB is currently guaranteeing the project’s financing, IHS Chemical says. YPFB is seeking a credit facility with the Central Bank of Bolivia to support the project, local media reports say. However, market sources have indicated that YPFB is actively seeking partners, primarily on the sales and marketing side, although the company is said to be holding discussions with major producers and distributors in the region. A tender for the construction contract will follow as soon as the second phase of the Tecnimont study—scheduled to last less than one year—is completed, according to a report from Agencia Boliviana de Noticias.

“There is confidence in YPFB’s ability to deliver the project, since they have already built one NGL plant and are currently building a second and an ammonia plant, due to start in 2016. The company certainly has access to the engineering, procurement, and construction resources that would enable it to deliver on these projects,” Tijerina says. Demand for PP and PE in Bolivia remains low, and the bulk of the planned complex’s production is expected to find its way to the export market, IHS Chemical says. In addition to the investments in the petrochemical sector, “in the longer term, Bolivia will be making strategic investments in its transportation infrastructure to further improve logistics costs,” Tijerina says.

Bolivia is expected to invest $3.03 billion in its hydrocarbons sector this year, with about 50% of the total allocated to projects in Tarija, the ABI report adds.