PEMEX Secures New Terminal in Renegotiated Agreement with BraskemBy Cinthya Alaniz Salazar | Wed, 09/29/2021 - 11:55
A year after PEMEX almost terminated its ethane delivery contract with Brazilian petrochemical producer, Braskem Idesa, the NOC has reportedly reached a new gas supply agreement which includes the development of a US$400 million ethane terminal in Veracruz.
In the original 2010 contract, PEMEX had agreed to supply Braskem Idesa with 66,000 ethane barrels per day for 20 years. Under the renegotiated agreement, Idesa will now receive at least 30,000 barrels per day until the proposed terminal becomes operational in the second half of 2024 or early 2025. Moreover, the new contract will also give the Brazilian subsidiary preferential right to acquire all the available ethane that the Mexican state company does not use until 2045 at prices in line with international markets.
The new terminal which is expected to be built on the Isthmus of Tehuantepec in Coatzacoalcos, Veracruz, will require investments of about US$400 million outlines a statement from the Brazilian company were PEMEX and other unnamed government entities will support the terminal construction. When completed, the terminal is supposed to fulfill the Idesa’s raw material need of its plant in Nanchital de Lázaro Cárdenas del Río, Veracruz.
“This offers the possibilities of making medium and long-term plans, by having access to various sources of raw materials that will allow it to produce polyethylenes at full capacity, to supply the local and international market," reads a press release by Braskem Idesa.
Although the renegotiated deal is subject to final approval from the Board of Directors from both parties, in addition to Braskem’s creditors, the deal stands to settle a long-running dispute that had begun at the start of the Lopez-Obrador administration who viewed the agreement as a a ‘leoine’ contract. Citing alleged acts of corruption from the previous administration and high operational costs the Mexican state company was able to successfully push for better terms.
In addition to these more favorable terms, the federal government will be provided with the opportunity to continue developing the country’s southeast energy sector and economy. According to Braskem Idesa the Ethylene XXI Complex project added US$4 billion to Mexico’s trade balance whilst generating direct and indirect jobs for local residents.