08 Mar - Braskem Idesa to restart Etileno XXI ethylene-PE complex in Mexico
Braskem Idesa says it is reopening its Etileno XXI ethylene-polyethylene (PE) petrochemical complex at Coatzacoalcos, Mexico, after signing agreements with Mexico’s state-owned companies Petroleos Mexicanos (Pemex) and National Natural Gas Control Center (Cenagas), reported Chemweek.
The complex was forced to shut down in December 2020 after Cenagas halted gas supplies to the plant. This followed unsuccessful talks between Braskem Idesa and Pemex over the renegotiation of an existing supply contract for feedstock ethane.
Braskem Idesa says it has now signed documents with both Pemex and Cenagas that will enable the facility’s “continued operation.” An agreement with Cenagas covers natural gas transport services for a term of 15 years. This is, however, conditional upon the outcome of further discussions between Braskem Idesa and Pemex over “potential amendments to the ethane supply contract and for the development of an ethane import terminal,” it says.
A memorandum of understanding (MOU) signed by Braskem Idesa and Pemex has set out “respective understandings” for the ethane supply discussion, as well as a forward process to enter into definitive documentation, approval by Braskem Idesa’s shareholders and creditors, and with reservations of rights, it says.
With the signing of these agreements, Braskem Idesa “immediately commenced to receive the service of natural gas transportation, which had been unilaterally terminated,” it says. The existing ethane supply contract between the two companies “has not been modified and remains in full force and effect,” it adds, noting that it “cannot predict the outcome of such discussions with Pemex, its shareholders, and creditors.”
Braskem Idesa announced in December it was taking steps to shut the Etileno XXI petrochemical complex after Cenagas halted gas supplies. Cenagas had said at the end of November it would not renew a contract for supply of natural gas and blocked supplies the following day, according to Braskem Idesa in a statement at the time. There were indications that the decision was driven by Mexican President Andres Manuel Lopez Obrador, who had announced that Pemex would no longer supply natural gas to Braskem Idesa as the contract terms were deemed to be unfair, according to Adrian Calcaneo, senior consultant with IHS Markit, at the time of the petchem plant’s announced shutdown.
Pemex has struggled to meet ethane supply commitments to the plant, the largest petchems investment in Latin America, as Mexico’s oil and gas production has declined significantly in recent years. Earlier in 2020, Braskem Idesa began importing ethane from the US to the plant. The company has spent $4 million on logistics infrastructure to be able to import up to 12,800 barrels/day of ethane, 19% of the volume required by the facility.
The Etileno XXI complex, which comprises a 1.05-million metric tons/year ethylene plant and three polyethylene (PE) units, had a utilization rate of 84% in the third quarter of 2020, according to a Braskem presentation later in the year. The main grades of PE produced are high-density polyethylene (HDPE) for blow molding and film, and low-density polyethylene (LDPE) for film.
As MRC informed earlier, in June 2020, Braskem announced the selection of Charleston, South Carolina for its new global export hub facility to serve international customers. The hub will provide packaging, warehousing and export shipping services to support Braskem's polypropylene (PP) production facilities in the United States. With the design and development phase well underway, the new global export hub was expected to be completed by the third quarter of 2020 and will have a capacity to support export shipments of up to 204,000 metric tons/year of PP and specialty polymers.