Mexico Cuts off Gas to Petchem Firm
Mexico has cut off gas supply to the Mexican arm of Brazilian petrochemicals group Braskem, both the government and the company reported on December 2, as a contractual dispute between the two sides intensifies.
"There's no more natural gas for the company because the contract has ended," Mexican president Andres Manual Lopez Obrador told reporters in a conference. His administration has been trying to renegotiate another contract covering the delivery of ethane to the Braskem Idesa Etileno XII plant near the Gulf coast, where it is used to make plastics.
The ethane contract was signed by a different Mexican government in 2010 and runs until 2034, requiring state oil firm Pemex to supply ethane at a low price to Braskem Idesa, which is 70% owned by Braskem and 30% by Mexico's Grupo Idesa.
Braskem Idesa confirmed in a statement on December 2 that Mexico's National Natural Gas Control Center (Cenagas) had informed it on November 30 that it would not renew their contract for gas transport. Cenagas restricted gas flow the following day, Braskem Idesa said, breaching contractual obligations and failing to take into account Braskem Idesa's request for 48 hours of reduced supply, so that operations could be ceased safely.
"Cenagas' actions have caused the total suspension of the plant's processes, with the consequent and negative repercussions not only for us, the plant, our customers, suppliers and employees, but also for the hundreds of businesses that depend on this supply chain affecting the national petrochemical industry and the economy as a whole," Braskem Idesa said. "The decision violates our rights including multiple legal provisions in force."
The company said it had repeatedly told authorities it was willing to discuss its contracts with Mexican state companies, calling for the rule of law to be respected.
"We inform the national and international financial community, our clients, suppliers, employees and collaborators, that Braskem Idesa, in compliance with its fiduciary and corporate responsibilities, must take the actions that exist within the framework of the law to defend its rights and investment," it said.