Have Lower Crude Oil Prices Affected Peru’s Petrochemical Industry?
Dec 10, 2015
While the recent drop in oil prices has been detrimental for oil exporting countries since their budgets are highly dependent on oil export revenues, this is not the case for oil importing countries such as Peru. The drop in crude oil prices from $100 per barrel to the current $50 per barrel has proven to be beneficial for Peru’s petrochemical trade balance.
For Peru, the drop in crude oil prices means lower import prices for its petrochemical requirements. Not surprisingly, lower prices have stimulated demand, as exemplified in the country’s polymer trade. With no local production, Peru is a net importer of polymers. As a result, the total import volumes of key polymers (polyethylene, polypropylene, polystyrene, PVC, and PET), into Peru during 2015 is higher than each of the last five years. Undoubtedly lower prices have stimulated this increased demand, with the average price for these polymers having dropped about 18 percent since 2014
Net Imports of Key Polymers to Peru.
With the start-up of operations at the Camisea gas fields in 2004, the country now has tapped its vast reserves, producing more than 1.5 billion cubic feet of natural gas per day. This has attracted many investors that plan to industrialize these resources and expand the country’s petrochemical industry into derivatives such as fertilizers or polyolefins. Unfortunately, it takes many years for major petrochemical projects to come to fruition, between raw material requirements and pricing, acquiring process technology for the chosen products, finding cost-effective logistic routes to key markets, and arranging financing. Consequently, even though no firm plans have been announced for Peru, numerous project developers will continue to promote various petrochemical development plans.
With the Camisea Consortium planning to continue expanding the Camisea and other gas fields, the volumes of feedstocks potentially available for petrochemicals will grow, making petrochemical developments more likely based on natural gas rather than oil (even though not all the oil fields in Peru have been explored). This will continue to make Peru an interesting country for petrochemical developments that can be sustained even in the face of low crude oil prices.