Page 5 - LatAmOil Week 39 2021

LatAmOil COMMENTARY LatAmOil

The joint venture did not say exactly how it had accommodate the Mexican government.
dealt with the $65mn worth of fines that Pemex
has racked up as a result of its past failures to Reduced tensions
deliver sufficient ethane to Etileno XXI. Presum- In any event, the tensions between the joint ven-
ably, though, the parties have settled the matter. ture and the government appear to have dissi-
BI said in its statement that the new agreements pated somewhat.
served to resolve all outstanding contractual This is not surprising, as BI has agreed to
disputes. terms that are more favourable to Pemex than
The signing of these deals probably comes as they were under the original agreement. The
a relief to the joint venture. BI has seen its perfor- joint venture has agreed to expect less ethane
mance falter as a result of Pemex’s failure to sup- from the state-owned company (and has proba-
ply the anticipated volumes of ethane, and it has bly agreed also to forego collecting the $65mn in
also found itself at odds with the Mexican gov- fines mentioned above). It has also agreed to pay
ernment as a result of its dispute with the NOC. market price for any surplus volumes of ethane it
Over the past year, BI has attracted no small buys from the NOC before 2045.
amount of negative attention from Mexican Additionally, it has agreed to move forward
President Andres Manuel Lopez Obrador, who with the construction of the $400mn ethane
is both a champion of Pemex and a cheerleader import terminal in Laguna de Pajaritos, with
for the idea that state-run companies (and not help and support from Pemex and the Mexican Braskem
private-sector entities) should dominate the government. This project will eventually absolve Idesa has also
national fuel and energy sector. The president Pemex from having to supply any feedstock to
has sharply criticised the original agreement BI, as it will be able to handle enough ethane to agreed to move
between Pemex and BI, saying that the terms of meet the needs of Etileno XXI in full.
the supply contract were not favourable enough But it will also benefit Mexican interests forward with the
to the NOC. directly. On the one hand, the joint venture has
indicated that it might eventually allow Pemex to construction of a
At odds with the government acquire a controlling minority stake in the new $400mn ethane
Lopez Obrador’s displeasure appears to have terminal. On the other hand, the project will also
had knock-on effects. support an initiative favoured by Mexico’s pres- import terminal
Late December, Cenagas, the state-owned ident – namely, the creation of an infrastructure
operator of Mexico’s natural gas pipeline sys- corridor across the southern part of the coun-
tem, halted shipments of natural gas to Etileno try. This plan, known as the Inter-oceanic Cor-
XXI. BI complained about this move, describing ridor of the Isthmus of Tehuantepec (CIIT), is
it as a “unilateral termination” and noting that designed to raise Mexico’s profile by facilitating
Cenagas had refused its request to postpone the trade between the Atlantic and Pacific Oceans.
cut-off for 48 hours so that it could prepare for But BI may not just be working to assuage
the safest possible shutdown. However, its pro- Mexico City. It may also be trying to buy itself
tests were to no avail; the shutdown happened some time. After all, Lopez Obrador’s term in
abruptly and deprived Etileno XXI of the gas office will come to an end in 2024, and Mexi-
it needed to maintain temperatures within the co’s next president may not be as eager to take
proper range for deliveries of ethane. Pemex’s side against private companies, in
At the time, there were some indications that which case the joint venture might not have such
Cenagas had taken this step against BI in light a difficult time negotiating a new ethane supply
of a separate contract dispute that had erupted deal if it needs to do so. But if Lopez Obrador’s
earlier in the year. However, there has also been successor follows a similar course, BI will be well
speculation that the pipeline operator went on the way towards finishing its new terminal
forward with the shutdown as part of a co-or- and securing its own supplies without help from
dinated effort to put more pressure on BI to Pemex. ™

(Photo: Braskem Idesa)

Week 39 30•September•2021 www. NEWSBASE .com P5