The Business Year

Stefan Lepecki

MEXICO - Industry

Long-term Commitment

CEO, Braskem Idesa

Bio

Stefan Lepecki is a mechanical engineer from the Federal University of Rio de Janeiro. He has an MBA from the Getulio Vargas Foundation of Brazil. He has over 30 years of experience in the petrochemical business. He was responsible for the implementation of the Braskem Idesa Petrochemical Complex from its inception in 2010 until it started operating in 2016.

“Plastic can truly improve the quality of people’s lives; however, as a society we have to learn to use it wisely.“

What opportunities has the company identified in Mexico’s petrochemical industry?

Our company was created after a government initiative to develop the petrochemical sector through an auction of 18 contracts with a duration of 20 years. After winning the auction, we decided to invest USD5 billion in the country because we believe in Mexico and have identified important drivers and potential in its petrochemical industry. The country’s geographical position is a plus, along with its FTAs with many countries. The service and labor available here is also prime. In all, the petrochemical industry in Mexico moves around USD60 billion a year. Around 60-70% of what we produce is consumed by the Mexican market, and we export the rest to more than 46 countries, particularly the US, Europe, and Central America. Our success in Mexico proves Latin America’s potential to encompass projects of this size. We are pleased with not only the financial results but also the relationships we have been able to establish with our clients.

Who are your main clients in the country?

We are in the middle of the plastic supply chain; therefore, our clients are a blend of companies that transform raw material to final products. We serve a variety of sectors from agriculture to packaging and automotive, among other industries that utilize plastic. The wide scope of the petrochemical industry makes it such a relevant sector in the country’s economy.

In what ways is the consumption of plastic increasing rapidly in Mexico?

All around the world, the consumption of plastic is increasing rapidly. There are many new necessities we have to consider, especially in the US due to the shale gas phenomenon. In China and Asia, we observe a transitional moment as a result of the tariff war between US and China. Demand is growing rapidly, not only in the US but also in Asia. We are optimistic about our global vision for the future of this industry.

How is the company promoting a more ecological use and handling of plastic?

This is a highly relevant issue, and we are concerned about the amount of plastic waste accumulating in the ocean due to a lack of action. Plastic can truly improve the quality of people’s lives; however, as a society we have to learn to use it wisely. As part of the industry, we feel a responsibility toward the government and society in general to promote better waste handling. The company is focused on increasing the reuse and recycling of products. We are committed to educating society on the responsible handling of plastic. The main driver of change will ultimately revolve around education, especially within families and schools. Chemical associations around the world are participating in and developing movements on these matters. The idea is to take advantage of the pros that plastic can offer and minimize the impact through reutilization. We also want to promote the use of technology to efficiently use natural resources and avoid waste. This also helps minimize water consumption. We want to take advantage of our global outreach to create an impact. Braskem Idesa is equally promoting initiates to develop plastic from renewable material such as sugarcane.

What are your production expansion plans in Mexico?

We are committed to staying in the country long term. The company seeks opportunities for expansion, and we will likely start by expanding our platform and complex. This can be achieved through small investments that can greatly increase our total production capacity. We are also looking into expanding our portfolio and the types of polyethylene we produce for our clients.

How will the new administration impact your 20-year contract with Pemex?

This will be the third administration that we will interact with, and we do not prioritize one party or another. We are committed to the country, and we perceive Mexican institutions to be strong. I am optimistic about this new administration due to the huge support we saw during the election phase for the President. We will continue to have a presence in the country and have already announced an important investment in exploration that will have a positive impact on the petrochemical industry. We plan to have a positive dialog with the new authorities on how to improve its ethane supply. This is relevant for the entire industry and not just Braskem Idesa.

How can Mexico improve and diversify its supply of ethane gas?

Ethane gas as well as natural gas are going through an important transitional moment. There has been a great lack of investment in the last few years that has created issues for Pemex in ethane production. In effect, Pemex started to increase imports of these resources. Importing these resources are a temporary solution, though we also need to look into taking advantage of the resources that we already have in the country. The new administration has announced a clear interest in recovering national production rates of natural gas, ethane, and oil, among other resources. This will require large amount of investment, and imports can close the supply and demand gaps for the meantime. There is a huge amount of potential to collaborate between Pemex and private companies to solve these issues. Dialog will play a key role in enhancing the competitiveness of Mexico’s petrochemical industry.

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