Braskem Idesa's ethane import a semi-permanent solution: CFO

Sao Paulo — Braskem Idesa's decision to import ethane to produce polyethylene at its complex in Veracruz, Mexico, is a semi-permanent solution, Braskem's chief financial officer, Pedro van Langendonck, said Wednesday.

The first ethane cargo was announced at the beginning of February amid reports that Mexican state-owned Pemex was struggling to deliver the amount of ethane signed with Braskem Idesa. The amount was 12,800 b/d, which is the equivalent to 19% of the complex's need.

"Pemex has been supplying roughly 70% to 75% of the contract volumes. At times, it goes even up to 100%, but on average, that's the range that we have been seeing," Braskem said during the company's earnings call on Wednesday.

Importing ethane into Mexico is part of a project inside Braskem Idesa called "fast track", in which cargo comes by ship from the US Gulf Coast and is delivered to the plant in trucks, a semi-permanent solution, according to van Langendonck. "The permanent solution would be to replace the trucks by a pipeline or something that would be more definitive there," he said.

The ethane supply contract between Braskem Idesa and Pemex recently led to an altercation between them. In February, Mexican President Andrés Manuel López Obrador said his government was analyzing the possibility of canceling the contract. The next day, Braskem said that the joint venture had not received a credit note worth about $26 million from Pemex for failing to supply an agreed amount of ethane.

The deal was signed in February 2010 and involves Pemex providing Braskem Idesa with 66,000 b/d of ethane for 20 years.