MOSCOW (MRC) -- Mexico’s president said on Aug. 22 an “abusive” ethane supply deal he has pushed to cancel between a consortium backed by Brazilian firm Odebrecht and Mexican state oil firm Pemex had likely cost taxpayers around 15 billion pesos (USD683 million), reported Reuters.
The contract between Petroleos Mexicanos (Pemex) and the consortium made up of Odebrecht-controlled Braskem and Mexico’s Grupo Idesa, was agreed a decade ago during the tenure of ex-President Felipe Calderon, who was in office from 2006-2012.
In a video address on YouTube, President Andres Manuel Lopez Obrador said his estimate was based on what he described as probable unfair subsidies and fines paid out over a failure to meet the terms of the deal he described as “abusive”.
“We’re talking about damages to the nation worth around 15 billion pesos,” said the president, who earlier this week declared the contract should be canceled.
Still, he suggested that about 2.1 billion pesos in penalties that he apparently included in his overall calculation had never been lost to Mexico because his administration ceased to pay the fines after he took office at the end of 2018.
Braskem Idesa did not immediately reply to a request for comment. Earlier this week the consortium rejected any wrongdoing and said it won the supply contract fairly.
Under the terms of the contract, Pemex has had to deliver ethane below current market prices.
Braskem Idesa said the price formula had no preference or advantage and was typical of long-term raw material contracts and consistent with prices Pemex charged in the 16 years before.
As MRC reported previously, Petrobras may need more than a year to divest its stake in Braskem, said Andrea Almeida, Petrobras CFO, in early July. She said during the companyпїЅs recent webinar that Petrobras plans to give more time for potential investors to make offers for the company"s assets, including for its refineries and stakes at its petrochemical and fuel distribution affiliates. The divestment of Petrobras"s stake in Braskem in 2020 would be desirable but "might not be possible" as the COVID-19 pandemic has changed market conditions, she said. The company plans to close part of its refinery sales in 2021. In December, Roberto Castello Branco, CEO of Petrobras, said that he wants to sell the companyпїЅs stake in Braskem within a year. Petrobras owns 32.15% of Braskem.
We remind that 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 DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.
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).