Pemex Plans New $2.8 Billion Plastics Plant

Mexico's state oil company has said that it will seek investors to build a $2.8 billion plastics and rubber plant by the end of the year in a bid to reverse losses at its petrochemical unit.

Petroleos Mexicanos said in a statement that the plant, which the company expects to have running by 2006, would produce polyethylene, styrene and other chemicals used to make plastic and rubber products for sale in the domestic market. Pemex, as the company is known, will auction a contract to build the facility and will own an unspecified stake in it.

Pemex Director Raul Munoz Leos might have difficulty attracting investment in the project after the company canceled the sale of a petrochemicals plant in 1995, analysts said. Pemex in 1995 solicited tender offers for an ammonia factory then canceled the sale nine months later.

“Munoz will have to do something that his predecessors couldn't figure out how to do,” said George Baker, an energy consultant and director of Baker & Associates in Houston.

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