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Pemex ethylene, PE output unaffected by Mexico pipeline incident: sources

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Pemex ethylene, PE output unaffected by Mexico pipeline incident: sources

  • Author
  • Phillipe Craig
  • Editor
  • Keiron Greenhalgh
  • Commodity
  • Petrochemicals

Houston — State-owned Pemex's ethylene and polyethylene production facilities ran normally even as a pipeline incident led fellow Mexican polymer producer Braskem Idesa to institute a temporary shutdown of operations, company sources said Thursday.

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The incident occurred last week and resulted in the shutdown of two Pemex gas processing complexes following a "clandestine attack" on a natural gas pipeline in Veracruz, Mexico.

Repairing the damaged pipeline led to natural gas and naphtha processing slowing at Pemex's Cactus and Nuevo Pemex sites, leading to reduced NGL production, a company source said.

Pemex, as a result, was unable to supply Braskem Idesa with contractual volumes of ethane, leading to a 36-hour shutdown of ethylene and PE production for Braskem Idesa that started August 10.

Pemex resumed supply to Braskem Idesa by Sunday, leading to the latter achieving a 90% operating rate by late Tuesday, a company source said.

Pemex's supply of ethane to its own steam crackers at Cangrejera and Morelos was not impacted, as those feeds are part of a different pipeline system, a company source said Thursday.

Pemex also maintains some ethane reserves that aided it in avoiding a shutdown at Cangrejera and Morelos, the source said.

Pemex on August 3 restarted the Cangrejera cracker following a one-day shutdown tied to electrical outages. The company saw feedstock constraints and weather-related outages lead to reduced PE output in June. The company's July production data is expected to be released in the coming weeks, it said.

The company produced a combined 30,301 mt of PE in June, down 5,409 mt or 15.1% compared with May, while the year-on-year dropoff was more pronounced at 7,560 mt or 20%.

Pemex has been dealing with an ethane production dropoff of around 20% since mid-2017 on lower wellhead output in southern Mexico as a result of elevated nitrogen levels and compression issues trimming overall NGL production in the region, according to company sources.

Pemex's supply deal with Braskem Idesa calls for it to provide 66,000 b/d of ethane for 20 years, and Pemex has typically produced around 100,000 b/d-115,000 b/d overall in recent years before seeing production fall since the start of last summer, according to company sources.

Long term, Pemex expects to see PE production rise in line with additional feedstock supply after recently awarding a three-year tender to Vitol for US-origin ethane imports.

Regular contract deliveries began in July and will increase this month with the Emilius arriving at Morgan's Point, Texas, this week for loading, company sources have said. Vitol has not responded to multiple requests for comment.

S&P Global Platts last assessed PE in the Mexican markets Wednesday as mixed week on week, with LDPE holding stable at $1,275/mt and LLDPE butene falling $5/mt to $1,115/mt, respectively

Platts' Mexican HDPE assessments closed stable to lower, with film shedding $20/mt to close at $1,245/mt. HDPE blowmolding and injection grades, meanwhile, both held flat week on week at $1,285/mt and $1,215/mt, respectively. All Platts Mexico PE assessments are made on a delivered Mexico City basis, via rail or truck.

--Phillipe Craig,

--Edited by Keiron Greenhalgh,