MEXICO CITY—Braskem Idesa S.A.P.I. and Petróleos Mexicanos have signed a memorandum of understanding aimed at modifying two ethane supply contracts that will allow the Ethylene XXI complex to operate.
The Brazilian-Mexican joint venture and the state-owned oil company first signed the contracts in 2010.
In a March 1 news release, Braskem Idesa also said state distributor Cenagas resumed supplies of natural gas to the petrochemical complex in Veracruz state on Feb. 26. Polyethylene production at the site partially resumed in early January, Braskem Idesa said, using an "experimental business model." The company did not disclose details of the process.
Cenagas (Centro Nacional de Control del Gas Natural) unilaterally suspended natural gas supplies to the $5.2 billion facility on Dec. 1. This followed President Andrés Manuel López Obrador's public criticism of the terms of the two deals under which Pemex agreed to provide Ethylene XXI with 66,000 barrels of ethane a day over 20 years.
The facility in Nanchital went on stream in 2016. In August 2020, López Obrador told journalists as he approached his second year in office that the contracts between the two parties had to be canceled because in his view they were unfair.
They had cost Mexico at least $682.5 million, not only in price subsidies awarded to Braskem Idesa but in fines paid by Pemex for failing to fulfill its contractual obligations, he added on another occasion, he said.
Braskem Idesa said it signed the memorandum of understanding with two Pemex divisions, Pemex Transformación Industrial and Pemex Exploración y Producción, on Feb. 26.
Apart from attempting to modify the ethane supply agreement, the parties would aim to build an import terminal, something Braskem Idesa executives have been advocating for several years in the knowledge that Pemex has often struggled to comply with its ethane supply obligations.
Braskem Idesa emphasized that any modification to feedstock contracts and the building of any input terminal would depend on the approval of the company's creditors and shareholders.
Speaking to reporters March 3, López Obrador said his government preferred to negotiate directly with international companies with whom it had differences of opinion rather than appealing to international tribunals, which he said were ponderous and did not necessarily "act with rectitude."
At the same news conference, Pemex CEO Octavio Romero Oropeza said the modifications included in the operating agreement would save Mexico about $661 million, according to multiple news sources.
Pemex, he said, would be required to supply ethane gas to Braskem Idesa only until 2024 and the amount of ethane contracted would be reduced to 30,000 barrels a day.
In addition, penalties applied to Pemex for failing to honor its contracts with the Brazilian-Mexican company would be withdrawn.