Bloomberg News

Sigdo Koppers to Start Up Peru Petrochemical Plant in 2015

December 15, 2011

(Adds production figures in ninth paragraph.)

Dec. 13 (Bloomberg) -- Sigdo Koppers SA, the Chilean industrial holding company, may import ammonia from Trinidad to jumpstart its delayed $800 million petrochemical complex in Peru and begin operations by 2015.

“We’re looking at multilateral and private-bank financing for our plant, which would be perfectly feasible with imported ammonia,” Geir Skarstein, general manager of the company’s Peruvian unit, said in an interview in Lima today. “We’re three years ahead of the other petrochemical ventures.”

Nitratos del Peru, a venture between Sigdo Koppers and Peru’s Brescia Group, is part of $60 billion in mining and energy investments the government expects to see during the next decade. The ammonium nitrate plant will produce explosives for mines in Peru, the world’s third-largest copper and zinc producer.

Nitratos is waiting for the government to negotiate royalties with Pluspetrol SA before it signs a supply contract for 65 million cubic feet of natural gas a day from the Camisea field in Peru’s southeastern jungle, Skarstein said. Importing product from Trinidad is an option if the government is unable to secure gas, used to manufacture ammonia, for the domestic market, he said.

Petrochemical plants in Peru have been delayed by a lack of gas and infrastructure such as pipelines, according to Cesar Gutierrez, an energy analyst at Utilities Peru. Camisea, Peru’s largest gas field, exports 60 percent of its 1 billion cubic feet per day of gas production.

Falling Prices

Others hoping to build petrochemical complexes include CF Industries Inc., Orica Ltd. and Petroleo Brasileiro SA. Odebrecht SA and SK Group are studying projects to produce polyethylene and fertilizers.

Ammonia, which reached a three-year high in October, will fall as rising shale output cuts gas prices, Skarstein said. New York-traded gas futures have declined by half in the past two years.

Shale gas is extracted by blasting millions of gallons of chemically treated water and sand underground, breaking up the rock to free trapped gas.

Nitratos plans to produce 710,000 metric tons of ammonia and 350,000 tons a day of ammonium nitrate annually, according to the company’s website.

Orica may also import ammonia if it can’t line up gas supply for its Peruvian project, country manager Robert McDonald said in a Jan. 19 interview.

Sigdo Koppers fell less than 1 percent to close at 908 pesos in Santiago. The stock has dropped 15 percent this year.

--Editors: Jasmina Kelemen, Charles Siler

To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net


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