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Northern Peru pitched for petchem development

Bnamericas Published: Wednesday, July 13, 2022
Northern Peru pitched for petchem development

Peru lawmakers have introduced a bill to congress to promote the creation of a petrochemical pole in the northern region of Piura.

Opposition party Renovación Popular submitted the proposal which would declare of national interest and public need the development of such an industry to produce ammonia and urea as fertilizer from natural gas.

“In the northern zone there is enough natural gas in lots 13A and 13B [also known as block XIII] to install modular plants for the production of ammonium nitrate and/or urea in the order of 200t/d,” the bill reads.

The legislators highlight the need to reduce dependence on imports due to availability and price concerns.

“The Russian invasion of Ukraine aggravated the shortage of fertilizers in Peru, since about 80% of these products were imported from Russia. Thus, imports of urea, one of the most widely used fertilizers, fell by 84% during the first quarter of this year,” Instituto Peruano de Economía said previously.

Sandra Flores, an economist with Lima-based Macroconsult, wrote in a report that “although Peru has been replacing lower purchases from Russia with higher imports from China (+440%), the United States (+357%) and Chile (+429%), [Peru] has a deficit that puts at risk the 2022-23 agricultural campaign which will start in August.”

In May, the government published a decree that dictates extraordinary measures to facilitate and guarantee urea supply, including an authorization of 348mn soles (US$88mn) for the purchase of the fertilizer for the 2022-23 harvest.

A recent World Bank blog stated that “soaring [fertilizer] prices are driven by a confluence of factors, including surging input costs, supply disruptions caused by sanctions (Belarus and Russia), and export restrictions (China). Urea prices have surpassed their 2008 peaks.”

Local press has reported that President Pedro Castillo’s administration is prioritizing the potential development of a petrochemical plant, specifically, a facility to process Bayovar phosphates, and that officials have held meetings with Chinese and Korean investors, without providing details.

In addition, there has been talk of increased engagement by Peru with Bolivia to tap production from the latter’s Bulo Bulo ammonia and urea plant.

Also Read Russia-Ukraine war may boost Bolivia’s hydrocarbons industrialization plan and Bolivia agrees with Peru to develop projects to export LNG, LPG, urea and build residential gas networks

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