Page 4 - LatAmOil Week 49

LatAmOil COMMENTARY LatAmOil

Etileno XXI is part of the Nanchital petrochemical complex (Photo: Braskem Idesa)

Braskem Idesa forced

to go without gas

Cenagas’ decision to suspend gas deliveries puts the Brazilian-Mexican JV in a difficult position

BRASKEM Idesa, the Brazilian-Mexican joint immediate interruption of its operating activi-
venture that owns the Nanchital petrochemical ties,” it said in its statement.
WHAT: complex in Veracruz State, is in a difficult spot. The suspension of ethane deliveries to the
The Brazilian-Mexican Last week, the company reported that Cena- facility was not exactly a surprise. Cenagas took
JV’s ongoing dispute over gas, the state-owned operator of Mexico’s nat- action amidst a protracted dispute between
gas and ethane sup- ural gas pipeline system, had halted shipments Braskem Idesa and the national oil company
plies has become more of natural gas to Etileno XXI, a unit within the (NOC) Pemex, the producer of the gas desig-
complicated. complex that produces ethylene and polyeth- nated for delivery to Nanchital, over the terms
ylene. In a statement, it protested against this of a 20-year ethane supply deal. Pemex repre-
WHY: move, calling it a “unilateral termination” that sentatives had said in mid-November that they
The suspension of gas “may have a material effect on the company’s were ready to cancel the existing contract, and
deliveries is happening at operating or financial results, depending on the Braskem Idesa responded several days later with
a time when the Mexican timing of the stoppage.” a statement declaring that the agreement was
government is trying to Braskem Idesa needs the gas in order to still “active and valid.”
promote the interests of
the public sector. maintain temperatures within the proper range Even so, it does serve to complicate matters
for deliveries of ethane, the main feedstock used that were already far from simple. This essay will
WHAT NEXT: at Etileno XXI. As such, it had to suspend oper- examine two of the factors that are likely to make
If Etileno XXI remains off ations at the facility very quickly after receiving this situation difficult to resolve.
line, Braskem Idesa could notice from Cenagas. It did ask the pipeline
see its credit ratings operator to wait for 48 hours so that it could The Brazilian connection
decline further. prepare for the safest possible shutdown, but The first of these is Braskem Idesa’s link to a
to no avail. “[In] compliance with safety proto- complex and ongoing investigation of corrup-
cols, Braskem Idesa initiated procedures for the tion charges in Brazil.

P4 www. NEWSBASE .com Week 49 10•December•2020