MEXICO CITY (Reuters) – Brazil’s Braskem Idesa must pay more of the costs in a new gas supply agreement with state oil firm Petroleos Mexicanos (Pemex) that will save Mexico some 13.75 billion pesos ($661 million), Pemex Chief Executive Octavio Romero said on Wednesday.
Pemex said under a deal struck late last month, it will only be required to supply ethane gas to Braskem Idesa until 2024 and would avoid past penalties for failing to meet the terms of the original contract, which Mexico’s government had pilloried.
Under the contract signed in 2010, Pemex agreed to supply Braskem Idesa with 66,000 barrels of ethane a day for 20 years.
Under the new terms, Pemex must deliver 30,000 barrels of ethane a day until March 2024, Romero said, speaking at a news conference alongside President Andres Manuel Lopez Obrador.
Moreover, the terms also stipulate that Braskem Idesa would cover the costs of transporting the ethane, and that the sum it would pay the Mexican firm for the gas would reflect “100 percent” the international reference price, Pemex said.
In addition, Pemex said it would work with Braskem Idesa so that the Brazilian firm could set up an ethane gas import terminal in order to “resolve its supply needs directly.”
After complaining about the original contract, Lopez Obrador in December said that Mexico would cease to supply natural gas to power the Braskem Idesa Etileno XXI plant on the Gulf Coast.
Lopez Obrador, who argues that private energy companies worked with corrupt officials in past governments to rip off taxpayers, said the move was legal and in the public interest. He credits it with bringing Braskem to the negotiating table.
Braskem Idesa said earlier this week that the natural gas supply to the plant, which produces polyethylene, a plastic commonly used in packaging, had been restored.
($1 = 20.7927 Mexican pesos)
(Reporting by Dave Graham; Editing by Frank Jack Daniel and Jonathan Oatis)