CEO Panel: “Towards an Energy Transition”
39th APLA Annual Meeting, Buenos Aires, November 2019
CEO Panel Theme 5: Game Changers for Latin America
Moderator: Marcos de Marchi, CEO, Elekeiroz / Chairman of the Board, ABIQUIM
Despite the progress made, the Latin American chemical industry is not yet very strong globally. What are the game-changers that can alter the importance of our chemical industry on the global stage?
Daniel González, CEO, YPF
The first game-changer has already occurred through the availability of resources in Brazil with the pre-salt, in Argentina with Vaca Muerta and in Colombia, Mexico, Ecuador and even Peru. Particularly in Vaca Muerta and the pre-salt, volumes are very significant and will ensure the availability of raw material in the future.
The second game-changer has to do with legal certainty. Petrochemical projects involve many billions of dollars of investment and many years of execution, so they need a framework of security, especially in those countries where the cost of capital, as in Argentina, is a competitive disadvantage. The level of legal certainty will allow external and internal investors to invest in these projects and be confident that the rules of the game when the project is put into production will be the same as when the investment decision was made.
An important game-changer is the way we make decisions. In Latin America, we have the investment capacity, but it takes us a long time to make those decisions. Additionally, there is the execution capacity: in China, for example, they have been able to build the Hengli project in 21 months, with a petrochemical complex that includes a highway to reach the site, a railway and a port. In Colombia, it is taking us a long time to make a decision about the development of unconventional resources; there are challenges of communities, guerrilla attacks and violence and a lack of continuity between the different governments. If we had the agility that other regions of the world have, Latin America could be a powerhouse in many areas of our business.
Pedro Manrique, Commercial and Marketing Vice President, Ecopetrol
Many of the game-changers that can transform the industry are connected to the issue of raw material. In Vaca Muerta and in the pre-salt, the conditions that add value to these raw materials must be created. Also, it is very important to have political and legal stability. If there were a commitment to sustainable economic growth, there would be a stronger consumer market, and thus, in countries such as Venezuela and Bolivia, the important natural resources that they have could be developed more productively.
Fernando Musa, CEO, Braskem
The leap in quality and quantity of petrochemicals in Latin America is connected to the growth of exports and the possibility of replacing imports. The resources are there, and so is the access to these resources at a competitive cost in the pre-salt and Vaca Muerta. Now it is necessary to define how these countries are going to export in important quantities and attract the necessary investments to reach this goal. It is necessary to define how both the economic blocs and the different countries at a particular level will be inserted in the world markets.