Venezuelan Petrochemical and Diaper Production Take Leap Forward

On his Sunday talk show Aló Presidente, Venezuelan President Hugo Chavez announced the expansion of national petrochemical production, and inaugurated a state-owned factory to produce diapers, sanitary napkins, and other personal hygiene products, as a step forward in the diversification of the country's historically oil-dependent economy.
A Venezuelan petroquemical plant (archive).

Mérida, June 22nd 2009 (Venezuelanalysis.com) — On his Sunday talk show Aló Presidente, Venezuelan President Hugo Chavez announced the expansion of national petrochemical production, and inaugurated a state-owned factory to produce diapers, sanitary napkins, and other personal hygiene products, as a step forward in the diversification of the country's historically oil-dependent economy.

"In the face of the world crisis we must accelerate our pace, constructing our socialist model," said Chavez in the broadcast from the El Tablazo petrochemical complex in Zulia state, one of five major complexes under construction or expansion nationally.

The principal complexes are geographically spread out across five of Venezuela's northern coastal states: Zulia, Falcon, Carabobo, Anzoategui, and Sucre. Smaller production facilities lie inland in the states of Tachira and Barinas. Last month, the project manager of the Carabobo site, Jorge Montero, reported that the expansion of the complex is 57% complete. Montero said the complex aims to employ 5000 workers directly and indirectly by the end of 2010.

Among the forty products produced at these complexes, Chavez emphasized agricultural fertilizers, including nitrogen and phosphate-based fertilizers, urea, and ammonia. He said the government is working to coordinate the expansion of petrochemical fertilizers with the planting and harvesting cycle of the government's national agricultural production plan, and that the new petrochemical complexes will prioritize the satisfaction of domestic needs over exports.

Venezuela is also expanding its production of plastics. Earlier this month, the state government of Aragua signed a contract with PEQUIVEN, the petrochemical subsidiary of the state oil company PDVSA, to expand the production of PVC, propylene and other plastics production in that state. PVC is a key material used by the government's innovative public housing program known as Petrocasas, which rapidly constructs small, simple homes out of PVC filled with concrete.

To propel the government's expansion of petrochemical production, the National Assembly (AN) approved a new Law on the Development of Petrochemical activities last week, according to Angel Rodriguez from the AN Energy and Mining Commission.

This law grants the state the power to take majority control of all petrochemical activities from the production of raw materials to the planning, management, regulation, and inspection of facilities, which will be supervised by the Energy and Petroleum Ministry.

"This instrument is a support for the Petrochemical Revolution Plan launched by President Hugo Chavez in 2007," said Rodriguez, referring to the law.  

When Chavez launched the plan as an initiative to end Venezuela's dependence on fertilizer imports, he estimated that approximately $20 billion in investments will be needed through to the year 2013. The state has sought much of this needed capital abroad. In 2006, Iranian President Mahmoud Ahmadinejad visited Venezuela and the two countries established a petrochemical joint venture worth $1.5 billion.

Japan and Brazil, with whom President Chavez along with a delegation of Venezuelan officials met personally in April and May of this year, respectively, have also expressed interest in investing. Venezuela has also discussed petrochemical cooperation with Russia, Ecuador, Argentina, India, and Saudi Arabia.

The new law permits the creation of mixed enterprises between PEQUIVEN and multinational companies, but stipulates that the government will retain control of the decisions.

The National Assembly passed a similar law last month to allow the state to take control of all oil-related services. According to Energy and Petroleum Minister Rafael Ramirez, 74 services in Zulia's oil-rich Maracaibo Lake alone, mainly the injection of water, steam, or gas for extraction, have been expropriated since the law was passed, and 8,000 workers have been absorbed into the PDVSA workforce.

In addition to petrochemical expansion, Chavez toured a newly opened factory for the production of diapers, sanitary pads, and other related products. The president dedicated the factory to all Venezuelan fathers in order to place an emphasis on fathers' role in the family.

"We have begun to produce for ourselves in order to be independent," Chávez said of the new factory, adding that its production is aimed to "satisfy needs, social needs, felt needs, in this case those of all mothers and fathers."

The factory was built with Chinese technology and engineering, which Venezuela contracted as part of its plethora of bilateral accords signed in recent years. Trade between China and Venezuela grew from $742 million dollars in the year 2003 to more than $10 billion last year, according to recent announcements by Venezuelan Commerce Minister Eduardo Saman.

On Sunday, Chávez said China's assistance in Venezuela's process of economic diversification and technological Independence is "very important," and invited Chinese companies to build factories in Venezuela to produce the machinery necessary to arm more diaper plants. "This is only the first factory; we need 20, 40, 50 factories like this one," said Chavez.

While in Maracaibo, Chavez also approved 129 million bolivars ($60 million) in national funding for an association of fourteen mayors in Zulia state who presented a joint proposal for more than one hundred municipal projects related to cattle and fish production, hydrology, infrastructure, health, education, and electricity. Chavez said the investment is part of the national government's Regional Development Acceleration Plan, and he called Zulia state, where the state government and capital city mayoralty are controlled by the opposition, a "strategic axis."