a revival

The Brazilian state of Ceará is betting that a revived plan for a petrochemical plant, financed by China Development Bank, will spur the expansion of a regional export-processing zone that has already attracted billions in investment from Asia. Jacopo Dettoni reports.

A multi-billion-dollar petrochemical complex developed by Chinese private firm Qingdao Xinyutian Chemical is expected to help drive the expansion of the export-processing zone (EPZ) in the state of Ceará in north-east Brazil.

Initially proposed, then abandoned, by Brazil’s ailing state oil company Petrobras, the project entails the construction of a refinery with a total capacity of 150,000 barrels per day in the first phase, then double that at full capacity in the second phase. It will import crude oil from Iran to re-export refined products to the Chinese market.

Total investment for each phase is estimated at $4bn, plus $500m to expand existing port facilities and build three 300-megawatt thermal power turbines to be installed in the refinery, with work done by Chinese contractors.

A final phase envisions the construction of an adjacent petrochemical complex, worth another $3bn. Financing for the whole endeavour will come from the Chinese Development Bank (CDB) and Qingdao Xinyutian Chemical has already filed a request to obtain environmental approval for the project.

A landmark project

The petrochemical complex is the landmark project of the EPZ expansion that the local authorities conceived to attract exporters. The aim is to replicate the success the EPZ achieved in its first years of operations since 2010. This included the establishment of a $5.4bn steel complex in partnership with South Korean investors.

The EPZ will include the development of districts for equipment manufacturing, electronics, granite processing and agribusiness, as well as the petrochemical district, for total investments that the state government puts at about $12.7bn.

At the same time, the state government, led by governor Camilo Santana, signed a memorandum of understanding with Korean Gas Corporation (Kogas) in September 2017 to build a liquefied natural gas terminal in the port to meet the area’s growing industrial demand for power. Kogas will develop the site in partnership with local Companhia de Gas do Ceará (Cegás) and South Korean construction powerhouses Posco E&C and Daewoo.   

These projects will spur the further development of the broader area of the port and industrial complex of Pecém, where the EPZ is located. The investment attracted by the EPZ has already boosted the volumes of goods handled by port facilities in the past year. Overall cargo movement grew from 4.6 million tonnes in 2012, to 11.2 million tonnes in 2016, according to government figures.

This article is sourced from fDi Magazine
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