Pequiven aims for recovery after glum 1998

July 26, 1999
Petroquímica de Venezuela SA (Pequiven) has outlined a plan to reverse its poor performance record in 1998.

Petroquímica de Venezuela SA (Pequiven) has outlined a plan to reverse its poor performance record in 1998.

Pequiven suffered a net loss of $65 million last year. But the petrochemical subsidiary of Venezuelan state oil firm Petroleos de Venezuela SA was given new growth goals under Pdvsa`s revised 10-year business plan (OGJ, June 28, 1999, Newsletter).

By 2008, the company aims to raise overall output to 22.8 million metric tons/year, global sales to $4.5 billion, and exports to $2.6 billion. This will require an investment of $8.4 billion, said Pequiven Pres. Eduardo Praselj.

A difficult year
The Pequiven chief described 1998 as "a particularly difficult" year for the global petrochemical industry: "World markets` instability, together with the economic crises experienced in Asia, Russia, and some Latin American countries, further accentuated the petrochemical low cycle, sharply affecting product prices, with a corresponding reduction in corporate sales revenues.

"In the case of Pequiven," said Praselj, "this situation was compounded by a significant drop in local demand, as well as by some operational difficulties that prevented (us from) achieving the 1998 production targets.

"Also, the systematic cost reduction efforts carried out by the company during the year were insufficient to offset the financial impact caused by the new labor law framework and the wage increases ruled by an arbitration panel, which was set up to solve a deadlock in the labor collective contract negotiations."

Pequiven`s production volumes for 1998, including those attributable to its subsidiaries and majority-owned joint ventures, was 4.6 million tons. Adding production from minority-owned JVs, total output for the year was 7.4 million tons, or 3% less than in 1997.

Total 1998 sales were 6.4 million tons, a slight increase over the previous year`s total, mostly attributable to direct exports of 1.5 million tons.

"Given the generalized price weakness experienced throughout the year, overall sales income was $1.4 billion, or 22% less than in 1997," said Praselj. "The total value of exports was $594 million, thereby representing a 29% overall decrease, in relation to 1997."

Praselj noted that, in spite of the difficulties faced in last year, Pequiven "made progress in some important areas.

"We began an internal transformation process that will enable us to become an even more efficient, integrated, and profitable corporation. The implementation of better managerial practices and the organizational changes introduced were directed to obtaining greater cost reductions and a sustained quality increase, as well as the strengthening of a customer-oriented culture."