Venezuela Officially Launches “Petrochemical Revolution”

Mérida, September 24, 2007 (venezuelanalysis.com)- President Hugo
Chavez officially launched Venezuela's "Petrochemical Revolution" on
his national TV and radio program Aló Presidente yesterday. With an
estimated investment of $20 billion, the president announced the
development of a petrochemical industry in the country over the next
five years, including the construction of a series of petrochemical
plants and factories along with investment and technology from Russia,
Iran, and Brazil.

"Venezuela is going to be a world power in petrochemicals," said
Chavez from a petrochemicals complex in the state of Zulia. As part of
the initiative to build the country's capacity in the production of
goods from oil-derivatives and to take advantage of the country's huge
oil and gas reserves, Chavez inaugurated the construction of a new
ethylene and polypropylene plant at the complex near Lake Maracaibo.

Later in his record-breaking 8-hour show, construction was
officially begun on several other petrochemical plants across the
country, including a fertilizer plant in the eastern state of
Anzoategui, as well as a petrochemical complex in the southwestern
state of Táchira, and another in the central state of Barinas.

"Venezuela, producing oil for a century, never developed the
petrochemical industry," said the president, criticizing the failures
of previous governments. "When the Bolivarian Revolution came to power
they were privatizing Pequiven (state petrochemical industry). The
factories were abandoned. There was almost no production, almost no
investment," he said.

Chavez explained that the development of a petrochemical industry,
producing a variety of goods from oil derivatives, would help change
the structure of the economy and would provide the country with a wide
spectrum of nationally produced goods for domestic consumption and for
export.

Chavez estimated that the initiative will require an investment of
around $20 billion over the next five years and will create as many as
700,000 new jobs during the first phase that will end in 2013. The
government plans to construct 87 large projects, 35 of them to produce
raw materials to supply another 52 factories for the production of
fertilizers, detergents, cosmetics, and other finished products. Chavez
said the industry is also expected to significantly increase state
revenues by the end of the first phase.

"We are going to construct 52 plants or industries in the
development of fertilizers, plastics, and others, for which we will
need $20 billion and that will generate a tax value of $100 billion per
year in total billing by the year 2013," Chavez explained.

The president laid out several key objectives for the first phase in
the "petrochemical revolution," during which he plans to triple
petrochemical production. With this increased production Chavez hopes
to put Venezuela at the top of Latin America in the production of
fertilizers, as well as convert the country into the number one
producer of plastics and plastic products.

The government plans to spread out the petrochemical factories and
complexes across the country, creating a national network of socialist
enterprises. Chavez explained that the factories would be
well-distributed among the different regions of the country and
insisted on not building industry in the northern part of the country
where there already are industrial zones, but rather in the south of
the country where industry is scarce.

Chavez emphasized that this would have been "impossible" under
capitalism, given that it would not have been considered "profitable"
to build industry deep in the center of the country. President Chavez
also mentioned plans to cooperate with other countries in the ALBA
block (Bolivarian Alternative for the Americas), especially Bolivia,
with whom Venezuela is planning a joint petrochemical complex. ALBA
members are Venezuela, Cuba, Bolivia, and Nicaragua.

Russian Investment

Venezuela will be relying on industry from several countries in the
industrial initiatives, including a large amount of investment from
Russia. During the president's TV program, Chavez received a call from
Vice-President Jorge Rodriguez, who explained the results of a recent
meeting in Russia with various industrialists from that country. A
number of Russian firms plan to provide capital investment and
expertise in a variety of industrial projects in the country.

"We are talking about 54 projects in agro-industry, energy,
technology, basic industry and infrastructure," said Rodriguez, who
assured that the projects would amount to an investment of "billions of
dollars." He emphasized the deepening of the commercial and economic
relations between the two countries. The projects have the intention of
transferring the necessary technology to Venezuela to increase the
country's industrial capacity.

Minister of Mining and Basic Industry Jose Khan stated that several
Russian business leaders will be traveling to Venezuela in the coming
weeks to consult with officials about the necessary technology for the
development of the different industries. Khan said the intention is to
build industry to transform the country's raw materials into
manufactured goods.

"We have to break from the policy that Venezuela had of being simply
exporters of raw materials," he said. "Now this will mean that the
country can enter the international market generating added wealth to
the nation."