Dec 26, 2007 Access Intelligence

Ecopetrol to Buy Petchem Producer Propilco (Colombia)

State oil company Ecopetrol (Bogota) has agreed to purchase Propilco (Cartagena), the largest producer of polypropylene (PP) resins in Colombia, for about $690 million. The acquisition is part of Ecopetrol's five-year $12.5 billion expansion program. The company plans to invest $3.7 billion in 2008 in production and exploration. "This acquisition has an enormous strategic value for Ecopetrol in terms of exploiting synergies in exploration, production, refining and the rest of the petrochemical chain," Ecopetrol says.

Until now, Propilco obtained 30% of its raw materials from Ecopetrol's Colombian refineries at Barrancabermeja and Cartagena. Ecopetrol announced plans last year to expand capacity from 80,000 to 140,000 bbls/day at the Cartagena refinery, which is 49% owned by Ecopetrol and 51% owned by Swiss trading firm Glencore (Baar). The additional capacity will feed petchem production at the site, including Propilco's PP plant. Propilco has sales of about $600 million/year.