Mexico Braskem Idesa partially restarts Ethylene XXI by buying electricity

Author: Al Greenwood

2021/01/07

HOUSTON (ICIS)--Braskem Idesa was able to partially resume polyethylene (PE) production at its Ethylene XXI complex by purchasing electricity, allowing it to circumvent the cut-off of natural-gas supplies by the Mexican government, the joint venture said on Thursday.

Ethylene XXI had used that natural gas to produce electricity, the joint venture said. "We have rearranged the plant so that it does not rely on natural gas for electricity (we are now buying electricity instead of producing) and also for some other energy purposes."

Braskem Idesa did not disclose the current utilisation rate of the complex. However, it noted that crackers typically do not run below 40-50%.

Braskem Idesa is the main domestic producer of PE in Mexico, and Ethylene XXI produced high-density PE (HDPE) and low-density PE (LDPE). The cracker at the complex relies on ethane to produce the ethylene needed for the plastic plants.

The joint venture had suspended production at the complex in December after the Mexican government failed to renew the gas contract that supplied fuel to the complex.

The government allowed the contract to expire because of a dispute over the ethane contract, said Mexico's president, Andres Manuel Lopez Obrador, commonly known as AMLO.

He alleges that it obliges state producer Pemex to sell ethane to Braskem Idesa at a steep discount, costing the country millions. He has repeatedly called for the cancellation of the ethane contract.

Braskem Idesa has since started legal measures under international arbitration, it said. The measures include a remediation and negotiation period.

The company reaffirmed its commitment to find a way to resolve Mexico's ethane shortage, which it says is at the root of the dispute between the joint venture and the Mexican president.

Braskem owns a 75% stake in Braskem Idesa. The remaining stake is owned by the Mexican producer Grupo Idesa.

Thumbnail image shows a red lid made of PE. Photo by Al Greenwood