Braskem intends to expand its operations - while staying true to its Brazilian roots
Brazil's leading petrochemical company is making an impact on the global stage through acquisitions, innovation and investment
Brazilian polymers major Braskem is delivering on its promise to expand into new territories. The company is implementing projects in Mexico and Venezuela, and also has production plants in the US and Germany following the acquisition of US-based Sunoco's polypropylene (PP) business in 2010 and US-based Dow Chemical's PP business this year.
With the purchase of the Dow PP business, Braskem says it has become the leading PP producer in the US, the world's largest PP consuming country, with 1.425m tonnes/year of capacity. The acquisition, concluded in September, gives Braskem two plants in the US (Freeport and Seadrift, both in Texas) and two in Germany (Wesseling and Schkopau). The Sunoco PP acquisition gave Braskem its "initial beachhead" in the US, says Luiz de Mendonca, executive vice president for the company's international business. "With the Dow acquisition, we are able to expand that presence."
Further investments in the US could involve expanding into new product areas beyond PP, he suggests. Braskem, like most petrochemicals producers with operations in North America, is monitoring opportunities to invest in new ethylene capacity to take advantage of the rich ethane reserves in the Marcellus Shale natural gas deposit, which is largely concentrated in Pennsylvania.
"Our strategy is focused on the Americas, which has advantaged feedstock," he says. "Look at the new reserves in Brazil, US shale reserves and the gas cracker project in Mexico, as well as the potential of countries such as Venezuela and Peru." Owning the Dow PP plants in Germany also will allow Braskem to participate in the European market as a local player. But Braskem's growth strategy will remain focused on the Americas, Mendonca went on to add.
Braskem is implementing a cracker and polyethylene (PE) project in Mexico and a PP project in Venezuela. The Mexican project, Ethylene XXI, is more advanced. A joint venture with Mexico's Idesa, it comprises an ethane cracker plus three downstream PE units with a combined 1.05m tonne/year capacity. The project is located in Veracruz province and will primarily supply the Mexican market, as well as the US Gulf Coast. Start-up is scheduled for 2015.
In Venezuela, Braskem has two projects, one for PP and another for PE, in partnership with state-owned chemicals producer Pequiven. But progress has been slow and, while work on the PP project is continuing, the PE project has been put on hold.
Propilsur, the PP joint venture created by Braskem and Pequiven, has moved the PP project to Paraguana in Venezuela's Falcon state so it can receive propylene feedstock from the Paraguana refinery complex. The project is now expected to have a minimum capacity of 300,000 tonnes/year. Braskem says engineering work is underway.
Mendonca acknowledges that the Venezuelan projects have taken longer than expected, but says this is not unusual for such large-scale projects.
The Rio Polimeros (Riopol) project in Brazil, which has been integrated into Braskem, took 10 years to develop, "and the Mexico project has been up and down for 20 years," he says. "We are creating a new industry [in Venezuela] and such a long lead time is absolutely normal."
It is important for Braskem to have a presence in Venezuela, the region's main oil-producing country, he stresses.
The Venezuela PP project is progressing faster than the PE project because it has a simpler configuration. The PP project will take its feedstock from existing refineries while the PE project involves gas separation to produce the ethane, plus an ethane cracker, Mendonca explains.
BRAZILIAN GROWTH
As well as pursuing overseas projects, Braskem is expanding its Brazilian operations to take advantage of the booming economy and expected growth in resins demand. Projects include a polyvinyl chloride (PVC) plant in Marechal Deodoro, Alagoas, in northeast Brazil, and a butadiene (BD) project in Triunfo in the southern state of Rio Grande do Sul. In the longer term, Braskem intends to invest in the Comperj petrochemicals project being implemented by parent group Petrobras in Itaborai in the southeastern state of Rio de Janeiro.
Braskem is optimistic about resins demand growth in 2012, although demand this year has been disappointing. Brazilian gross domestic product (GDP) is forecast to grow by 3.5% in 2012, and resin demand is expected rise at a higher rate, says Rui Chammas, Braskem's vice president for polymers. GDP growth is also forecast for most other South American countries, he notes.
This year, Brazilian resins demand has been slower than expected, says Chammas. Last year ended with strong expectations for economic growth and with high inventory levels across the resins supply chain, but growth was slowed as a result of budget controls implemented by the Brazilian government under the new president Dilma Rousseff, he explains.
With lower-than-expected economic growth, inventory levels in the plastics supply chain were adjusted and, as a result, resins demand was flat in the first half of this year. Demand has improved in the third quarter, Chammas notes, and is more in line with expectations.
State-owned energy group Petrobras's Comperj refinery and petrochemicals project is expected to help meet rising domestic resins demand in the second half of the decade.
The project includes downstream plants for PE, PP, styrene, ethylene glycol (EG), benzene and paraxylene (PX). Braskem intends to partner Petrobras in the ethylene cracker and polyolefins projects. The petrochemicals part of the Comperj project is expected to start up in 20162018 (see below). "Comperj will provide important new ethylene production in Brazil. It's important for us to be part of that," says Chammas.
Petrobras said in August that it has reconfigured the project, resulting in increases in capacities for PE and PP. The project, which will include a second refinery, is expected to have the capacity to produce 960,000 tonnes/year of PE and 900,000 tonnes/year of PP.
Precise details of the cracker and poly-olefins projects have yet to be defined, says Chammas. "Braskem and Petrobras are working on the detailed configuration of the complex", he says.
To meet rising domestic and regional demand until the Comperj project comes on stream, Braskem is investing in debottleneckings and new production plants for PE, PP and polyvinyl chloride (PVC) in Brazil, says Chammas. A 200,000 tonne/year PVC plant is scheduled to start up in Alagoas next year, raising Braskem's PVC capacity at the site to 460,000 tonnes/year. The company is also planning a 100,000 tonne/year BD project in Triunfo. The plant is expected to begin production in 2013, boosting Braskem's BD capacity by 30%.
The third pillar to Braskem's growth strategy, in addition to domestic and international growth, is the development of bio-based materials (see article on bio-based materials on page 19).
The company already produces bio-based ethylene from sugarcane ethanol for the production of green PE, and is studying a second, larger-scale green PE project. It also plans to produce propylene from bio-based ethylene for the production of green PP.
To succeed with such ambitious projects requires an entrepreneurial spirit, suggests Mendonca. "For the green PE production, we have the feedstock in Brazil, the plant in Brazil, most of my clients are in Europe and a lot of the research is being conducted in the US. To put all that together requires an entrepreneurial type of company."
For the Mexican project, too, Braskem had to take risks.
The project had been on the drawing board, in various incarnations, for more than 10 years, with Braskem appearing as a late entrant in 2008. Key to the project's success was the development of a different feedstock pricing model with Mexico's state-owned energy group Pemex, Mendonca says.
Taking advantage of the shale gas play in the US also will require a different risk profile to that of a traditional chemicals company, he adds.
Keeping up with Brazilian demand also will be challenge. Resins demand is expected to be boosted as a result of huge investments in infrastructure as the country prepares to host the World Cup in 2014 and the Summer Olympics two years later.
But for Braskem, it is not enough to focus on the domestic market, says Mendonca. "We need to expand our reach beyond Brazil."
COMPERJ PROJECT DEVELOPS
BRAZILIAN STATE-owned energy group Petrobras has reconfigured its Comperj refinery and petrochemicals complex in Itaborai, Rio de Janeiro.
The project will include a second refinery and will use ethane, in addition to naphtha, as feedstock for its petrochemicals production.
With the additional feedstock, the polyethylene (PE) capacity will be raised to 960,000 tonnes/year instead of 800,000 tonnes/year, while the PP capacity will be 900,000 tonnes/year instead of 850,000 tonnes/year.
Braskem, which is part-owned by Petrobras, will partner the state-owned company for the polyolefins projects.
Petrochemicals production at Comperj will also include 400,000 tonnes/year of styrene, 380,000 tonnes/year of ethylene glycol (EG), 154,000 tonnes/year of BD, 355,000 tonnes/year of benzene and 480,000 tonnes/year of paraxylene (PX).
Petrobras said the project will no longer include polyethylene terephthalate (PET) production. Instead, the company is expected to supply PX output from Comperj to its new PET and fibers complex under construction at the Port of Suape in Ipojuca, Pernambuco, northeast Brazil.
The group has already started construction work on the Comperj project and expects to start up the cracker, one PP train and the remaining downstream petrochemicals plants in 2016. A second PP train is scheduled to start up in 2018.
Petrobras said the addition of a second refinery train reflects increased demand for refinery products.
The first refinery is scheduled to start up in 2013 and the second in 2018.
