UPDATE 1-Mexico's Pemex board OKs venture with Mexichem

Wed Jan 16, 2013 9:46pm EST

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MEXICO CITY Jan 16 (Reuters) - The board of Mexico's Pemex approved on Wednesday a venture between the oil monopoly and conglomerate Mexichem to produce vinyl chloride monomer (VCM), a chemical used to make plastic pipes, resins and paints.

Pemex's go-ahead for the venture, first announced in 2011, follows months of uncertainty about future of the deal. Mexichem has still to sign off on the project, valued at about $500 million.

Pemex said that Mexichem would contribute an undetermined cash amount to upgrade Pemex's Pajaritos petrochemical facilities in the city of Coatzacoalcos, in the Gulf state of Veracruz.

The plant will continue to be staffed by Pemex workers.

Mexichem had given up on the venture with Pemex in November, citing long delays, and said it planned instead to focus on the extraction and sale of its own products and to pursue opportunities to produce VCM.

In a brief written statement to Reuters, Mexichem said late on Wednesday that it would reconsider the Pemex project but gave no further details.

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