Braskem Investigating Petrochemicals Plant in Peru, May Invest $3 Billion

Braskem SA (BRKM5), Latin America’s largest petrochemicals producer, and Peruvian state oil company Petroperu SA said they will seek to build a $3 billion petrochemical plant on the Andean country’s coast to meet rising Asian demand for polyethylene.

The plant, which may start producing 1 million metric tons a year of the resin by 2017, would be the only petrochemical facility on Latin America’s Pacific Coast, Braskem vice- president Luiz de Mendonca said. The partners will conduct a $5 million, one-year feasibility study, he said.

“The project depends on sufficient natural gas reserves and the construction of the Southern Andean gas pipeline,” Mendonca said today at the signing of a letter of intent in Lima. “There’s a long road to travel before we can make a petrochemical complex a reality.”

The plant is part of $10 billion in energy investments expected by Peru’s government in the next seven years, including petrochemical complexes to be built by CF Industries Holdings Inc. (CF), Orica Ltd. (ORI) and Sigdo Koppers SA. SK Group is also studying a project to produce polyethylene, a resin used in packaging material.

Mendonca said the plant seeks to tap gas from fields operated by Repsol YPF SA (REP), Argentina’s Pluspetrol SA and Brazil’s state-controlled oil company Petroleo Brasileiro SA, known as Petrobras.

Braskem fell 1 percent to 13.04 reais today in Sao Paulo. Petrobras rose 0.5 percent to 21.67 reais.

To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

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