20 November 2009 16:10 [Source: ICIS news]
By Anna Jagger
LONDON (ICIS news)--After more than ten years of planning, and some false starts, it looks as if Mexico will finally gain the petrochemicals investment it needs. Earlier this month, ?xml:namespace>
“This project will probably be the most important petrochemicals project to be built in the
Under the terms of the feedstock contract, Pemex will supply Braskem and Idesa 66,000 bbl/day of ethane for a period of 20 years.
Braskem plans to adopt a project finance model, with at least 70% financed through debt. Braskem said its board has until December 2010 to make a final investment decision.
A 20 year term was required by the banks, although industry observers have commented that a longer term contract of 25-30 years would normally be preferable for such a project.
A guaranteed supply of competitively price raw materials is crucial for the project to succeed. Braskem and Idesa said they were confident that Pemex would be able to honour the feedstock supply contract, despite
“There are some risks, because the hydrocarbons production is declining,” commented Uriegas. “But we trust that the necessary measures are being taken to foster the necessary capacity.”
On the upside, the project is located close to the lucrative
Ethylene XXI is a new version of a project conceived more than ten years ago. The original project, named “
Obstacles have included the need for near-term earnings from Pemex feedstocks and political opposition to private investment, continued Buhler. “Braskem and Idesa, as well as Pemex, have been able to learn from past experiences and develop what is apparently a successful package which will satisfy
The project is expected to generate between 6,000 and 8,000 jobs during construction, and about 3,000 post-construction. Construction is expected to take about three years, and require 90% of the investment.
Braskem was a late entrant to the project. In fact, it was during the APLA meeting in
Idesa has been involved in the project from the early stages. “It has taken more than 10 years for us to reach this happy solution,” he enthused.
Braskem will control the joint venture with a majority stake, reflecting the Brazilian company’s size and polyolefins experience. Idesa will bring to the venture its knowledge of the Mexican market.
Pemex might also become a shareholder in Ethylene XXI. Carlos Pani, a vice president of Pemex’s petrochemicals arm Pemex Petroquimica (PPQ), suggested that Pemex might take a 10-20% stake. “My understanding is that both Braskem and Idesa would be glad to have Pemex as a partner,” he told ICIS news on the sidelines of the APLA meeting.
Uriegas said details including the shareholder structure will be fully defined over the next three months. “Having Pemex as a minority partner could bring some value,” he observed.
The product slate for Ethylene XXI also needs to be defined. Under the current plans, the complex would produce 450,000 tonne/year high density PE (HDPE), 350,000 tonnes/year of linear low density PE (LLDPE) and 200,000 tonnes/year of low density PE (LDPE).
However, Mexican polyvinyl chloride (PVC) producer Mexichem has expressed an interest in purchasing some of the ethylene from Ethylene XXI for the production of vinyl chloride monomer (VCM). This would leave less ethylene for PE production.
Mexichem, which had originally planned to partner Braskem and Idesa in the project, is discussing the possible purchase of 200,000 tonnes/year of ethylene from the joint venture, the company’s chief executive, Ricardo Gutierrez, revealed.
Cleantho Leite Filho, director of international projects at Braskem, explained that if Mexichem decided it wanted to purchase ethylene from the project, “we could consider not producing LDPE and sending [the ethylene] to Mexichem”.
Gutierrez said Mexichem withdrew from the project because the conditions were not right. Mexichem’s priority, he explained, was to conclude negotiations with Pemex regarding an upgrade of an existing Pemex VCM plant that would supply Mexichem’s PVC production. The upgrade, which would require an $80m investment by Mexichem, would increase VCM production at the Pemex plant from about 200,000 to 400,000 tonnes/year by the end of 2012.
An ethylene supply agreement with Braskem and Idesa would enable Mexichem to build a new 600,000 tonne/year VCM plant in
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