Braskem spars with Pemex over Mexican complex

The Mexican state-owned firm Cenagas is cutting off natural gas supplies to Braskem Idesa, an ethylene and polyethylene joint venture in Coatzacoalcos, Mexico, controlled by the Brazilian petrochemical firm Braskem. Braskem says the cutoff is forcing the venture to halt operations. “Braskem Idesa will take applicable legal measures to protect its rights,” it says. Pemex, the Mexican state-owned oil and gas company, and Braskem have been feuding about supplies of ethane feedstock to the complex, which opened in 2016 with 1 million metric tons per year of ethylene capacity. Pemex has struggled to keep up with supplies, especially given slumping oil and gas production due to the COVID-19 pandemic. Braskem has been supplementing Pemex’s ethane with imports from the US. In April, Fitch Ratings downgraded Braskem’s credit rating because of vulnerability in ethane supply. And last month, according to a report in the Cuban publication Prensa Latina, Pemex said it was backing out of its contract with Braskem, largely because of what it sees as overly generous terms granted to the chemical maker by a previous government. Braskem said at the time that it hadn’t been notified of a termination of the contract.