Bolivia’s petrochemical industry set to prosper thanks to new plant

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The gas separation and liquefaction plant Gran Chaco, in the town of Yacuiba, in the southern Bolivian state of Tarij&nbsp

Undertaken by Yacimientos Petrolíferos Fiscales Bolivianos (YPFB), the first tests have begun for the Gran Chaco plant, a huge gas complex made up of more than 70 hectares, which aims to consolidate Bolivia as the main natural gas exporter in South America. The plant has been built to maximise the use of and diversify the country’s export offerings, and is set to be the focal point of Bolivia’s petrochemical industry as it looks towards internationalisation.

The President of the Plurinational State of Bolivia, Evo Morales Ayma, and the Vice President, Alvaro García Linera, promoted the construction of the complex, which will begin commercial operations in April 2015. Estimated business projection for the plants is $872m per annum for the commercialisation of liquefied products from natural gas in the southern cone.

“If it wasn’t for the fight and effort that the people of Bolivia put up, this plant, with which we move from the nationalisation to the industrialisation of our hydrocarbons, wouldn’t exist”, stated the re-elected Evo Morales, after last year’s elections in October – elections that ratified the direction of the new strategic policies for the development of the hydrocarbon sector in the country.

The YPFB, a Bolivian state-owned oil company, allocated $608.9m for the construction of the new plant, which is located in Tarija at the southern extreme of Bolivia, on the border with Argentina. It will process up to 32 million cubic metres of gas per day. The objective of the plant, which is the third largest in the region, is to obtain 3,140MT per day of ethane; 2,240MT per day of liquid petroleum gas, as well as additional volumes of isopentane and natural gasoline. Of the plant’s total production, Bolivia will make 82 percent of the liquid petroleum gas, made of propane and butane, available for export. The methane will be returned to Argentina as a dry gas export, in accordance with the stipulations contained in the contract between YPFB and the state-owned company YPF.

$872m Estimated business projection of Gran Chaco

The rich gas, which contains methane, ethane, propane, butane and other liquefied compounds, comes from the biggest production fields in Bolivia, like San Alberto, San Antonio and Margarita. It will feed the complex via the Juana Azurduy de Padilla gas pipeline. The complex recovers the surplus of energy that was formally exported to Argentina as natural gas.

Spanish company Técnicas Reunidas was in charge of the construction of the Gran Chaco plant, an endeavour that also included the participation of nine contractors and 50 subcontractor companies from Bolivia, Argentina, Italy, Spain, Belgium and China. The project employed more than 5,000 workers and technicians to face the civil, mechanical, assembly and installation works.

New income The funds invested in the plant, which underwent initial tests on October 16 last year in Yacuiba, Tarija, will be recovered within an estimated period of five years, according to Carlos Villegas, President of YPFB.

“The benefits we are going to obtain are important. We will obtain an estimate of $400m a year, that means that if the investment was $680m we can cover the investment, which was a loan given to us by the central bank, within two years”, says Villegas. “However we are not going to do that, because we need to make other investments. We are going to return it within five years – which is quite a short time period for the contracts that we have signed with the Central Bank of Bolivia.”

Villegas calculates that for the sale of the gasoline, isopentane and liquid petroleum gas, both on the internal market as well as on the external one, an estimated $872m as gross income per year will be obtained. Gran Chaco is the second plant that YPFB started up in less than two years to make maximum use of the liquefied products of the gas exported to Argentina and Brazil. The Río Grande Liquids Separation Plant has been running for over a year in the Santa Cruz de la Sierra area, and produces an average of 360 total measured depth of pressure liquefied gas (PLG), 440 million barrels per day of natural gasoline and 190 million barrels per day of isopentane.

With the total of the PLG production obtained from the Río Grande Plant, Bolivia is able to be self-sufficient and fulfil all its requirements, and is still able to export the surplus to the markets of Paraguay, Uruguay and Peru, diversifying its international export offerings in the process. From August 2013, this complex produced 86,287T of PLG, generating extraordinary utilities.

National plastics The industrialisation of the natural gas could not be a reality in Bolivia without the Gran Chaco plant, which will treat input products like propane and ethane that will be used in future complexes for propylene/polypropylene and ethylene/polyethylene, which Bolivia intends to construct in the shortest possible time frame.

The national government decided to prioritise the construction of the propylene/polypropylene plants with an approximate investment of $1.8bn. The complex is located in the region of Tarija and from 2018 it is anticipated to process around 350,000MT per year of resins for the industrialisation of hard plastics.

In an ambitious project, Bolivia also expects to concretise the start up of the ethylene/polyethylene complex with an unprecedented historic investment in the year 2022 – to produce around 750,000MT of polyethylenes of different characteristics and applications. The second part of the project proposes the building of another three plants of high- and low-density polyethylene.

With both petrochemical plans, Bolivia, which until some years ago was considered one of the poorest countries in South America, intends to generate greater added value to natural gas, diversify its productive manufacturing matrix of plastic products, generate direct and indirect employment and export the surplus polymers to other countries in the region.

Italian company, Tecnimont, completed the first stage of the Bolivian ethylene/polyethylene project, firming up the conceptual engineering for the complex of industrialisation of the natural gas. They are also expected to be awarded the PDP and extended basic engineering contract for the second quarter of 2014. Meanwhile, Tecnimont, due to its broad and proven international experience, was also trusted with the necessary strategical support work for the propylene/polypropylene project.

Elsewhere, YPFB has been building an ammonia/urea plant with an investment of $862.5m in Cochabamba, located in the very centre of the country, where it will produce 756,000MT per annum of urea, a fertiliser that is in great demand. It is expected that it will not only improve internal food safety and the national agro-industry, but that it will also favour and diversify national exports with added value. The plant is expected to begin operation in 2015.

Greater reserves During the last six years, YPFB increased the volume of its natural gas reserves in Bolivia by up to 10.45 trillion cubic feet of natural gas, which guarantees sufficient supplies for the internal market consumption, exports for the external market (Brazil and Argentina), as well as the industrialisation process, considered a national priority.

Bolivia is the main natural gas provider of the region, with an index of incremental production of 65 million cubic meters of natural gas per day, and it is continuing to increase its processing capacity by up to 97 cubic meters of natural gas per day, with 11 treatment plants.

The country maintains an aggressive exploration plan with the participation of national and transnational companies that have been operating for nine years on national territory. There are plans to increase the reserves and the national production of oil and natural gas even further.

With a combination of public and private investment, $7.07m was invested in the development of the whole national production chain of hydrocarbons from 2006 to 2013, and for the current management the investment was $3.02m, from which 64 percent is earmarked for greater tasks of exploration and exploitation.

With the current nationalisation process and the state administration of hydrocarbons, Bolivia managed to add $22.21m of oil income from 2006 to 2013, a historical index that is dynamising the national economy by propitiating the transfer and distribution of income in the country, as well as contributing to the growth of the international net reserves that the Central Bank of Bolivia administrate. This was up to $15.44m in October 2014, 49.8 percent of the GDP calculated as $31m.

Additionally, the development of hydrocarbon activity generates income that was designated to the financing of social policies of Bolivia, destined for vulnerable segments of society such as the elderly, children and pregnant women, including the Renta Dignidad (state funded pension scheme), Bono Juancito Pinto and Bono Juana Azurduy.

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