Pemex has issued a tender for ethane imports to cover the next three-plus years as it aims to address feedstock issues at two Mexican steam crackers, a source with the state-owned energy producer said Friday.
The tender is for a contract that would run through about June 2020 and calls for the delivery of up to 240,000 mt (around 4.25 million barrels) of refrigerated ethane with a purity of at least 94% in 2018, and up to 288,000 mt (around 5.1 million barrels) per year in 2019 and 2020, according to the source and subsequently verified by company documents.
Ethane shipments would be between 6,000-7,000 mt (around 107,000-124,000 barrels) and delivered exclusively to Pemex’s Pajaritos terminal in the Southeastern state of Veracruz, the source said.
The ethane will be used only for the production of ethylene at Pemex’s crackers in Cangrejera and Morelos, the source said, adding that contractual obligations were not impacted or related to this proposed contract.
Pemex’s Pajaritos terminal houses five ethylene storage tanks recently retrofitted for the intake of refrigerated ethane, according to company sources.
The terminal’s current capacity limits the incoming volume sizes, although Pemex is exploring a terminal expansion and other projects that would improve ethane storage capacity, the source said. While ongoing, those talks are in the early stages and any potential project would involve partnerships and outside investment, the source added.
Previously, Pemex had been supplementing its shrinking ethane production with spot cargoes from the US while simultaneously exploring more long-term solutions. The need for ethane imports comes as the company deals with lower wellhead ethane production in southern Mexico, the source said, adding that elevated nitrogen levels and compression issues were having a negative effect on overall NGL production in the region.
Pemex’s internal analysis calls for a 20% drop in ethylene feedstock ethane supply during the first half of 2018 to 80,000 b/d from 100,000 b/d, company sources say.
Compounding the issue is that Pemex has been contractually obligated to supply Braskem Idesa — a joint venture between Braskem of Brazil and Mexico’s Grupo Idesa — with 66,000 b/d for cracking at the Etileno XXI plant in Veracruz since mid-2016.
Additionally, Pemex also supplies ethane to its two nearby ethylene plants at Cangrejera and Morelos, which can consume up to 68,000 b/d of ethane combined if run at full rates. A third Pemex ethylene plant, capable of consuming up to 11,000 b/d of ethane, has sat idle since April 2016 after a deadly explosion and fire at adjacent downstream capacity halted operations.
US ethane exports have spiked since the opening of Enterprise Products Partners’ Morgan’s Point, Texas, ethane terminal in 2016. Exports ramped up in 2017, from 135,000 b/d in January of last year to 234,000 b/d in December, according to US Energy Information Administration data.
Mexico is the seventh country to import US ethane, following Canada, India, the UK, Norway, Sweden and Brazil, EIA data showed.
