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Pemex fails to send USD26 million credit note to Braskem Idesa

February 28/2020

MOSCOW (MRC) -- Mexico's Braskem Idesa has not received a credit note worth about USD26 million from state-run Pemex for failing to supply an agreed amount of ethane, reported S&P Global with reference to Braskem's statement Thursday.

According to Braskem Idesa, the payment is related to "limited damages" and is provided for in an ethane contract signed by the two companies. The contract integrates the Mexican petrochemical complex's financing structure.
Braskem Idesa was not available for comment immediately Thursday on when the note was due or what its next steps would be.

Braskem Idesa is a joint venture between Brazil's Braskem and Mexico's Idesa and has a nameplate production capacity of 1.05 million mt/year each of ethylene and polyethylene (PE).

On Wednesday, Mexican President Andres Manuel Lopez Obrador said his government was analyzing the possibility of canceling the supply contract between Pemex and Braskem Idesa. The joint venture, on the other hand, said it has been talking to Pemex and will take the appropriate contractual measures if necessary.

The deal was signed in February 2010 and involves Pemex providing Braskem Idesa with 66,000 b/d of ethane for 20 years. However, the state-owned company has been struggling to fulfill its part of the agreement. In 2018, former Braskem president Fernando Musa said Pemex was facing operational challenges and could not deliver all the ethane it needed.

In the first half of February, Braskem Idesa said the company received its first imported ethane cargo so it could produce polyethylene at the complex in Veracruz.

Pemex did not respond to a request for comment Thursday.

As MRC informed before, Braskem is no longer pursuing a petrochemical project, which would have included an ethane cracker, in West Virginia. And the company is seeking to sell the land that would have housed the cracker. The project, announced in 2013, had been on Braskem's back burner for several years.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,093,260 tonnes in 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments rose from both domestic producers and foreign suppliers. The estimated PP consumption in the Russian market was 1,260,400 tonnes in January-December 2019, up by 4% year on year. Supply of almost all grades of propylene polymers increased, except for statistical copolymers of propylene (PP random copolymers).

Braskem S.A. produces petrochemicals and generates electricity. The Company produces ethylene, propylene, benzene, toluene, xylenes, butadiene, butene, isoprene, dicyclopentediene, MTBE, caprolactam, ammonium sulfate, cyclohexene, polyethylene theraphtalat, polyethylene, and polyvinyl chloride (PVC).
Author:Margaret Volkova
Tags:PP, PE, PP random copolymer, propylene, ethylene, gas processing, petrochemistry, Braskem, Pemex Petrochemicals, Brazil, Mexico, Russia, USA.
Category:General News
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