VENEZUELA - Petrochemical Sector.

A priority for the current regime, the petrochemical sector in Venezuela has failed to grow as planned. Some of the big projects have remained suspended since populist President Hugo Chavez took office in early 1999.

Under a programme unveiled in June 1999 and revised in 2000, the country's production of petrochemicals and chemicals, including fertilisers, should rise from 8.8 million tons/year in 1999 to 21m t/y by 2010, with an investment of $10 bn. In his inauguration speech on Feb. 2, 1999, Ch vez made this promise: "When I hand over this government, Venezuela should have a powerful chemical and petrochemical industry".

Chavez has opened the gas and petrochemical sectors to participation by foreign firms and Venezuelan investors. But both the local and foreign companies have shied away, partly because of the president's negative position towards free market reforms and partly in view of a downturn in the petrochemicals business in recent years.

In February 2000 Chevron backed out of a $1.5 bn petrochemical joint venture with PdV Chemicals, a unit of PDVSA. Chevron then said adverse economic conditions were the main reason. But ExxonMobil is investing in a joint venture with PdV Chemicals to have a $2.65 bn olefins plant built at the Jos industrial centre. The JV was approved by the government in mid-2002 (see below).

In the massive restructuring of the hydrocarbon sector completed by early 1998, PDVSA became a holding company. Under this group, operating units include PdV Chemicals. Under PdV Chemicals come Petroquemica de Venezuela (Pequiven) which is in charge of the petrochemical sector, and Pequiven's downstream units which are in charge of a variety of chemical production streams.