Petrochemical 101, the great Bolivian tragicomedy

Carlos Miranda Pacheco is one of our hydrocarbons’ expert, his reflection appeared in Pagina Siete:

Speaking of energy

Petrochemical, the great national tragicomedy

2012-12-07 08.11.23 amGovernment officials, with the enthusiasm of having discovered the wheel, brag about being the first to have advocated the industrialization of gas. Therefore, some clarifications are worthy.

On October 18, 1969, general Ovando was the Bolivian President who proposed the industrialization of gas as other proof to the nationalization of Gulf in public discourse.

Petrochemical is a tragedy. For our country with small, land-locked internal market and few routes of export, the biggest problems have been and are having one or more markets secured and able to reach them with competitive prices.

Brazil, during the seventies of the 20th century, was the ideal opportunity. A market of some 200 million people requiring our gas. Accept the purchase of urea and the opening of its market to future production of Bolivian polyethylene were conditions for the supply of gas. This agreement should be put into effect.

Achieved the above, looked upon the countries of the Pacific. The Cartagena Agreement with plans of Industrial programming, provided a good opportunity.

The years when the export to Brazil matured, were used on difficult negotiations in the Andean Pact to achieve assignment to Bolivia’s production of ethylene and polypropylene, for the whole region and search for other markets.

Argentina was not, nor is the market. Bahia Blanca Petrochemical produces what we want to place. Chile does not either. Withdraw from the Andean Pact and supplies from overseas. An attitude similar to the purchase of gas.

For the 21st century, the agreements of the Andean Pact were dashed.

We started the 21st century in a special relationship with Brazil, a true partnership. It seemed that the dramatic search for markets would have a happy ending.

In 2002, YPFB and Braskem of Brazil, one of the largest petrochemical of the continent, have signed a letter of intent to install a petrochemical pole in Puerto Suarez. And so came the “gas war”. The big victims, Bolivian citizens and silently the national petrochemicals. The 3058 Law and after the so-called “nationalization” ended up in breaking the alliance with Brazil. Petro-chemistry disappeared from the Bolivian-Brazilian agenda.

The comedy begins. In 2006, a plan is formulated for the industrialization of gas, showing an ignorance that causes stupor: Petrocasas in Cararollo, cut sections of PVC panels for prefabricated houses. A garage plant to manufacture metal containers’ caps and fabricate gas pipes for household gas installations, extracting polyethylene. This special plan was to use petrochemicals and not industrialize gas and produce them. Didn’t prosper. Singular petro-chemistry strategists managed the new political Constitution of the pluri-national State, instructed the creation of the Bolivian industrialization of hydrocarbons company (EBIH), dependent from YPFB. Was created and nothing happened. The EBIH remains silent and bingo! YPFB is responsible for petrochemicals.

Quickly, calls for a bid, key in hand, for the construction of a plant of ammonia and urea in Bulo Bulo, with funding from the Central Bank. They do not even have their own premises, but the work has been awarded. The project is subject to many observations. The most important: location and lack of markets.

In a genius stroke, to solve the lousy location, indicates that a Bulo Bulo railway will be built to Montero to transport production. No one knows what to take back [transport] to Bulo Bulo.

Markets? The answer is another genius idea. A marketing agent (trader) that will be responsible for selling the production will be recruited. Prices? Silence is the answer. The comedy continues. The EBIH reappears and informs that by 2013 will start the plant of petrocasas, the pipeline for gas and caps for metal gas containers.

Another chapter in the drama is hinted. The BCB will pay through YPFB more than 800 million dollars for the construction of the plant in the Chapare. It is not yet known how much will cost the railway to Montero.

It is not a tale dear reader. The money that is being spent to meet political pledges without due economic analysis of the project, is yours and mine.

Tragic? Unreal? sadly it is real and a well done recollection!

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