Industry Overview Argentina has increased its consumption of petrochemicals products to one of the highest in Latin America. The presence of indigenous oil and gas resources adds further to the petrochemicals industry’s growth potential. Major players in the industry are US-based Dow Chemical, Spain-based Repsol YPF and Argentina-based Solvay Indupa and Petrobras Energia Participaciones (PEPSA).

Industry Developments Recent petrochemicals production has suffered severe setbacks due to power shortages. This has compelled some companies to look at sourcing their power requirements independently. As reported in September 2007, a natural gas regasification plant may be constructed in the Bahia Blanca region, which accounts for almost half of the country’s petrochemicals output. It was reported in the same month that US-based Eastman Chemical plans to sell its 185,000 tonnes per annum (tpa) Zarate Argentine polyethylene terephthalate (PET) plant to Mexico-based Grupo Alfa. Reports in February 2007 suggested that Brazil-based petrochemicals group Oxiteno – one of the largest producers of ethylene oxide (EO) and its derivatives in the Latin American region – is considering plans to set up a production facility in Argentina.

Factors Limiting Capacity Expansion The Argentine petrochemicals industry has not received investment relative to its potential. This can be attributed to shortages of power and feedstock as well as the imposition of strict price controls. Shortage of power has had a particularly adverse impact on petrochemicals production during the winter season this year. Investment in the oil and gas sector – which is essential for meeting industrial feedstock and power requirements – has also been low, due to the imposition of limits on energy prices. Salary and taxrelated uncertainties have further dampened the investment climate.

Industry Forecast Given the presence of indigenous oil and gas resources and the fact that Argentina boasts one of the highest per capita petrochemicals consumption levels in Latin America, the Argentine petrochemicals industry has immense growth potential. With economic recovery, the domestic demand for petrochemicals products is expected to rise even further. However, in the light of rising gas consumption, there is an immediate need to conduct further gas exploration. Furthermore, the country needs to focus on the development of natural gas transportation facilities, investments on which have been largely inadequate thus far.