Feedstock Festival


As South America’s third-largest oil producer at 970,000 barrels per day (bbl/d) of crude oil but only around 2 billion in proven reserves, the high value petrochemicals sector is a […]

As South America’s third-largest oil producer at 970,000 barrels per day (bbl/d) of crude oil but only around 2 billion in proven reserves, the high value petrochemicals sector is a focus for the nation’s oil company Ecopetrol, which announced its plans to expand petrochemical production in 2011. The company’s refineries (located and Cartagena and Santander) are currently undergoing multibillion-dollar expansions, with over $4 billion spent in Cartagena alone in order to improve efficiency, volume, and the standard of the final product. One side effect of these expansions is greater availability of feedstock and precursors for petrochemical production.

Propilco, Colombia’s sole polypropylene producer will benefit distinctly from the upped refining capacity. Once the improvements at Cartagena are complete, it will receive double the supply of locally-produced propylene it currently does, and in 2015 when the Santander refinery is renovated the figure will rise to around three times the current amount. The cost savings will be significant.

Foreign firms are also investing or planning joint ventures with local companies, as such ventures will create competitively priced products when the new renovations are considered. Opportunities for these products on the domestic market are provided by the infrastructural improvements currently being undertaken by the government, and also the agricultural industry, which relies heavily on plastic packaging to export its products. Likewise, per-capita plastics consumption in Colombia is much lower than in developed countries, although Colombia still imports petrochemical products, which represents growth opportunities for producers.

Once the refinery projects are complete, the government hopes to turn what is now a small import requirement of petrochemical products and precursors into an export flow. Currently, however, expanding production is not possible. The improvements underway at Colombia’s refineries must be completed before the petrochemical industry is supplied with the feedstock and precursors it needs to expand. The work at those refineries, while much needed, also contributed to slower crude production in 2013. Unstable security surrounding Colombia’s pipelines also hampered production, although the petrochemical outlook, once its infrastructure is complete, would mostly be immune to such pressures. This is another compelling argument for the importance of the sector.

The government would like to establish the country as an important natural gas supplier in the Andean region, an aspiration that bodes well for the petrochemicals industry. Indexed prices for a range of petrochemicals grew for the first time in three years in June of 2013, reflecting strong global demand. If such rises continue, which they may due to the strength of plastic-hungry consumer and automotive markets in Asia, there will be further incentive for Ecopetrol, which acquired Propilco in 2008, to make further investments in the sector, and for the Columbian government to encourage foreign firms to do the same.

In 2014, however, growth is just beyond the horizon. The next step for the industry will arrive when the improvements to the country’s refining infrastructure are complete, and in mid-2014 they were still in progress. The future, though, is promising.