Price and market trends: Braskem in talks with Petrobras on ethane supply for Comperj

11 October 2013 10:08  [Source: ICB]

Braskem plans to use ethane as a feedstock for its units at Comperj, and it is negotiating pricing with Petrobras, the Brazil-based chemical major said. Pricing could be established by the end of this year, Braskem said. Petrobras declined to comment about what prices it would set for the ethane.

Recently, Brazilian business newspaper Valor Economico reported that Petrobras was to supply Comperj with cheap ethane.

“The natural gas price, specifically the ethane price, will be exactly coupled to Mont Belvieu,” Petrobras CEO Maria das Gracas Foster was reported as saying to the newspaper.

The Complexo Petroquimico do Rio de Janeiro (Comperj) is a massive project, with Petrobras planning to build two refineries and Braskem developing several chemical units.

Those units would also include a world-scale ethane cracker, along with downstream polyethylene (PE), polypropylene (PP) and polyvinyl chloride (PVC) units. The company has said that it would make a final decision on the petrochemical portion of the project by 2014.

If the ethane is priced low enough, Comperj’s shift towards natural-gas-based feedstock should help the complex compete against US producers, which are increasingly using lighter feedstock. The US has large supplies of low-cost ethane, thanks to the advent of shale gas and tight oil.

Several companies are expanding capacity in the US, giving them a cost advantage against much of the world, which relies predominantly on oil-based naphtha as a feedstock.

This additional capacity will exceed US demand, and producers will likely target Latin America for any excess production.

  • Additional reporting by Al Greenwood

Author: Leo Siqueria

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