What common challenges do you see in the petrochemical industry in Latin America?

For many years, the petrochemical industry in Latin America has faced a common challenge: the scarcity of raw materials to operate plants at total capacity. Brazil has experienced shortages of naphtha, Mexico of ethane, and Argentina of ethane and propylene. Despite the current weak demand and low margins for basic petrochemicals, local producers of ethylene, such as Dow, and polypropylene, like PetroCuyo, continue to face a demand growing parallel to the GDP. This implies the need for additional production capacity, if the feedstock is available and competitively priced. The need for foreign direct investment is critical for industry to grow.

What are the key opportunities that Argentina, Brazil, and Mexico can take advantage of?

Argentina possesses a significant opportunity to harness the potential of Vaca Muerta. Once the political situation is solved and policies to attract investment are established, I believe that Argentina will be able to monetize natural resources provided in Vaca Muerta. Additional production capacity for fertilizers come to mind for Argentina and Brazil. There is optimism regarding midstream or gas pipelines in Argentina. We see the need for necessary infrastructure to transport gas from its source to consumption points. One of the critical challenges for the industry will be finding ways to monetize gas and transform it into a consumable product in both the domestic and foreign markets. For Argentina, achieving self-sufficiency in natural gas requirements will be a great opportunity.

Like Vaca Muerta, Brazil has a chance in Presal, and Mexico is building a terminal to import ethane from USGC producers. The United States has achieved highly competitive access to ethane and propane through fracking, providing them with a significant advantage in the industry.

What is Latin America's main asset that makes it a strategic region?

Latin America remains a net importer of petrochemicals, including commodities and specialized products. However, what makes it an interesting region is its strategic position driven by its greatest asset; a population of 670 million inhabitants whose demand continues to grow steadily. Despite current economic difficulties, the need to consume a wide range of products that utilize petrochemical derivatives persists, and it is likely that between 2023 and 2025, the region will continue to be a net importer of petrochemicals like plastic resins.

What trends are impacting the petrochemical industry and how do they translate to the logistics segment?

Digitalization is pivotal in enhancing the efficiency of refineries and petrochemical plants in Latin America and this focus is at the forefront of the regional industry’s attention. For instance, Colombia utilizes digitalization to achieve more effective production by determining the optimal timing for plant maintenance and increasing operational rates.

On the other hand, Argentina and Brazil, countries with significant agricultural industries that generate waste, are exploring options to convert these residues into biofuel. Biomass and biofuels are becoming critical components of this energy transition, aimed at reducing CO2 emissions and reusing materials that were previously discarded. Thanks to technology and new processes, these types of materials will be harnessed and, eventually, become essential elements of this energy transition.

To which subject has the petrochemical industry conversation evolved to in recent years?

Recycling, both mechanical and chemical, has the potential to generate a greater quantity of raw materials to replace or substitute the original resources. Petrobras, for example, is focused on producing biogasoline and biofuels. Furthermore, in the past two or three years, there has been a shift in the industry conversation and companies are already exploring how to get on the energy transition path. These trends, which initially gained momentum in Europe and the United States, are now part of senior management discussions when evaluating strategies for the petrochemical industry in the region.