PVC and specialty chemicals maker Mexichem SAB de CV of Mexico City has pulled out of a consortium to build a US$1 billion ethylene cracker on Mexico's Gulf Coast.
We thought the conditions for this project were not the ones we wanted, so we decided to withdraw, Enrique Ortega, investor relations director of Mexichem, said in a Nov. 9 interview.
Pemex Gas y Petroquímica Basica, a subsidiary of state-owned oil company Pemex (PetrÃ³leos Mexicanos), recently announced the signing of a memorandum of understanding for the cracker's feedstock with Brazilian petrochemicals giant Braskem SA and Grupo Idesa SA de CV of Mexico City.
In a statement, Pemex said the agreement calls for it to supply Braskem and Idesa with 66,000 barrels of ethane per day for the cracker, which will be built in Coatzacoalcos, Mexico, by 2015. Braskem and Idesa will build and operate the cracker, Pemex said.
The facility will have a production capacity of about 2.2 billion pounds per year, and substantially reduce the importation of petrochemical products derived from ethane, Pemex said.
In 2008, the Mexican government made its authorization of the cracker's construction conditional on interested parties sealing a long-term feedstock deal with the Pemex subsidiary.
Pemex said that Mexico City wants the project, known as Ethylene XXI, to include polymerization units to allow for PE to be produced at the site. Such an expansion would cost an additional $2 billion, observers have suggested.
São Paulo, Brazil-based Braskem Latin America's largest petrochemical company and Idesa have not said if any other companies will join them in a new consortium.
The original project included Braskem and Idesa, Mexichem, and Alpek SA de CV, the petrochemicals business of conglomerate Alfa SAB de CV of Garza García, Mexico.
In addition to supporting Ethylene XXI, Idesa had backed Pemex's failed Phoenix Project. Proposed during the 2000-06 administration of Mexican President Vicente Fox, the project aimed to supply 2.64 billion pounds of ethylene and 1.32 billion pounds of propylene annually starting in 2009.
The Phoenix Project was canceled when Pemex and its partners, including Idesa, Nova Chemicals Corp. of Pittsburgh, and Indelpro SA de CV of Monterrey, failed to agree on feedstock prices.
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