Frederico Fernandes, Argus Media

SAO PAULO 
EnergiesNet.com 09 16 2022

A new 80,000 b/d ethane import terminal under construction by petrochemical company Braskem Idesa in Veracruz state, Mexico, marks the conclusion of years of disagreements over an ethane supply contract signed years ago between Braskem and Mexican state oil company Pemex. The $400mn project began construction in July and is to be completed by late-2024. The ethane will feed Braskem Idesa’s 1mn t/yr ethylene plant in Coatzacoalcos. Argus spoke to Cleantho de Paiva Leite Filho, general director of the new venture, called Terminal Química Porto México (TQPM). This interview was translated from Portuguese and edited for length.

TQPM was created to supplement feedstock to produce polyethylene (PE) that was unavailable in the country. How did Braskem Idesa and the Mexican government manage to reach an ethane supply agreement?

Ethane production in the country was insufficient for several reasons. Oil and gas production in Mexico has been falling and when the new [Mexican government] administration arrived they recognized that they were not in a position to meet the additional ethane volumes of the original contract that [Pemex] had with us.

We had a tough and complex discussion, but basically the agreement was made to avoid getting into formal litigation with Pemex. So we had to recognize that Pemex was not able to supply that volume and that we had to renegotiate our agreement. On the Pemex side, they would have to recognize that to allow [Braskem Idesa] to continue, which is so important to the country, the federal government had to support the building of the terminal to import raw materials that Mexico could not provide.

And that’s when the TQPM was born. It is a company of its own, included in local regulatory terms, and which has a single interested customer, Braskem Idesa. From the company’s incorporation, we were able to start the basic engineering and detailed engineering.

How did the search for a strategic partner for the terminal happen?

In parallel with the terminal’s creation, Braskem Idesa has always considered it would be appropriate, but not necessarily mandatory, to have a partner with maritime port terminal experience. So we partnered with Advario, a newly created company of the Dutch Oiltanking group, which has more than 40 terminals worldwide in more than 20 countries, including chemical, gas and energy terminals.

The whole process happened in a simple way, since there is no problem of competitiveness or concentration. We believe that the [Mexican] regulatory part of the process will be resolved quickly by next November.

What are the next steps for the terminal?

We continue to work on the project, which aims to be completed and start operating by the end of 2024. By 2025, Pemex’s [ethane supply] commitment to us will be further reduced, and Braskem Idesa will have the option to purchase from Pemex any available ethane volumes. If Pemex has 10,000-15,000 barrels b/d, we will buy these volumes. If they have 30,000-40,000 b/d, we will buy those too. But we are going to take away from Pemex this commitment to fixed volumes, which is a commitment that also causes difficulties for them because gas and ethane production projections are not a very certain, and also because some of Pemex’s own petrochemical complexes are operating at lower capacity.

And as we are very close to the US, especially to Houston, which is the world’s leading ethane producer, and with Mexico being the best destination for ethane imported from the US, it was a perfect match.

You took over operations as the main executive after holding several positions in the company. How is the project developing?

I took over as general director of TQPM in August, and we are in the team-building phase. We already have a project director and hired ICA Fluor, Mexico’s largest engineering company, to do the EPC, which is progressing well. We already have almost 75pc of the detailed engineering done, and have acquired the main long lead items for the terminal, including tanks, pumps, and compression systems. We are confident that we will be able to finish the project on schedule.

From a regulatory point of view, there is a set of environmental licenses and permits, because the project includes the construction of a pier, the terminal itself, which will have two tanks with 50,000cm capacity each, auxiliary equipment, and a 10.5km pipeline between the terminal and the Braskem Idesa complex.

The main licenses have already been obtained, including the environmental and social impact studies, and the license to start earthworks. Work began with the rescue of flora and fauna in July. In August we started earthworks, and now we are already receiving the first sections of the pipeline, which will start construction in early October

The installation of ducts is already underway, and now it’s time to start the civil part after creating foundations for the main equipment, especially the tanks. After this stage, the electromechanical construction follows in 2023 and 2024.

While the TQPM terminal was being planned, Braskem Idesa developed a so-called ‘fast-track’ solution to ensure the flow of ethane to the company. How did you put together the solution?

Fast-track is a temporary solution planned to last three to four years, but not designed to endure some 20 years.

We did the fast-track design and implementation in 9-10 months. We entered into an agreement with a company specializing in trucked liquefied natural gas supply, a company that already does this in the southern US, the Gulf region, and for certain companies in Mexico that need natural gas but are far from pipelines, such as mining and agricultural companies. We also found an operator and a physical space that allowed construction of a transshipment station for liquefied ethane, where it is unloaded from ships, goes through a smart-pass tank, and then to a loading station that can transport four cryogenic containers at the same time.

This fast-track solution was initially designed for a capacity of 12,000 b/d, equivalent to around 20,000 metric tonnes (mt)/month to transport ethane and complement Pemex’s supply. Over time, we upgraded this solution to around 24-25,000 b/d, which equates to 40,000-45,000 mt/month, and we are currently operating that way. There are even days when we surpass those numbers, but on average we are operating in this range of 40,000-45,000 mt/m and we are in the process of making a third upgrade to bring the capacity close to 60,000mt/m. With this new capacity and Pemex’s commitment to maintain 30,000 b/d, it will take us above 90pc of operating capacity.

Eventually, if Pemex is delivering a little more and if the fast-track has a peak period, we may even exceed capacity. In the case of the new TQPM terminal, the situation is different, as it is designed to supply 120pc of Braskem Idesa’s ethane needs.

Could this excess capacity lead to an eventual expansion of PE capacity at the Braskem Idesa complex?

The new terminal will allow Braskem Idesa to operate at full load. The company would consider an eventual expansion project, but there is nothing defined.

Will TQPM’s operational start necessarily lead to the dismantling of the fast-track solution?

This will be a decision to be taken together with the solution’s partners once the TQPM terminal starts operating. It makes no sense to keep dozens of trucks and tanks idle, but it is a solution that can be adapted for other uses, such as a small small-scale LNG imports solution.

By Frederico Fernandes

argusmedia.com 09 15 2022