A modern ethylene complex in Mexico

Mexico

Stefan Lanna Lepecki, general director and CEO of Braskem Idesa, talks to The Energy Year about the company’s 2021 milestones, its ethane supply agreement with Pemex and its environmental commitments. A joint venture between Brazil’s Braskem and Mexico’s Grupo Idesa, the company operates the USD 5.2-billion Braskem Idesa Petrochemical Complex.

What milestones has Braskem Idesa achieved on different fronts in the last year?
The year 2021 was very good for Braskem Idesa. We managed to navigate the pandemic period successfully, and we even managed to improve our performance in terms of safety and the environment at our Ethylene XXI complex in Nanchital, Veracruz. In addition, we had the opportunity to expand our capacity to import ethane through the construction of a temporary terminal, which we established last year in Coatzacoalcos to support our production and lines of operation.
Considering the post-pandemic scenario, we adapted ourselves in the supply chain to better serve our clients and aligned ourselves with the new ways of plastic consumption during the pandemic.
After our pivotal ethane supply agreement with Pemex in September 2021, we were able to review the capital structure of the company. We issued a bond on the international market valued at USD 1.2 billion, which was a tremendous success for our sustainability plan and our commitment to reduce greenhouse emissions by 15% by 2028. This benchmark is aggressive for our industry.
Additionally, we have strengthened our partnership with Alcamare International Recycling Group, a leader in plastic collection and segregations. Together with them, we are producing post-consumer resin (PCR), which is a mix of residues and virgin plastic. We’ve launched a PCR that is partially made of recycled material, and the sales volume of this product soared in 2021. We also started exporting PCR to North America last year.

What intricacies are there in the recent agreement with Pemex, and how important will the construction of the new ethane terminal be for the company?
In 2010, we signed an agreement with Pemex under which they will supply us 66,000 barrels of ethane a day. Pemex’s insufficient investment has led to a decrease in the production of oil and, consequently, of ethane. The drastic drop from 2.8 million bopd to the current rate of 1.6 million bopd has triggered the lack of ethane feedstock in Mexico. It will be difficult to reverse this situation in the short term despite the gradual increase in local oil production. More private and public investment is thus needed.
We reached a milestone agreement with Pemex which included a new ethane supply scheme. The government also committed itself to supporting Braskem Idesa’s new 80,000-barrel-per-day ethane port terminal located at Laguna de Pajaritos in Coatzacoalcos. This terminal is valued at USD 400 million and is expected to be up and running by Q3 of 2024. It will cover 100% of the needs of our petrochemical facility and also its potential expansion.
This venture is a part of the Corredor Interoceánico del Istmo de Tehuantepec scheme. This scheme will develop the south of the country by connecting the Pacific with the Gulf via logistical infrastructure that enhances the circulation of goods and energy in the region.
Furthermore, this facility will be world class and give us what we need to establish flexibility in our feedstock supply. We will continue to have the possibility of consuming ethane from Pemex but also have the alternative to import ethane from the US in a very competitive way to sustain our operation on a long-term basis. This will allow us to operate Ethylene XXI at 100% of our total capacity.
While the scheme is implemented, we will continue to receive ethane from Pemex. We already have a temporary terminal working for us in Coatzacoalcos with a capacity to import around 25,000 barrels per day. We are expanding this site in the second half of this year to increase its capacity to 32,000 barrels per day. Together, the supply from Pemex and the imports received through this new facility will allow us to operate at 100% capacity until the new terminal is built.

What commitments are you making to improve performance in the domestic market?
With a population of around 130 million, Mexico has an enormous petrochemicals potential. Moreover, the country’s total demand for polyethylene is around 2.2 million–2.3 million tonnes. As a company, we have the capacity to produce 1.05 million tonnes per annum, and this year our aim is to operate our Ethylene XXI complex at 95% capacity.
Moreover, we are taking advantage of Mexico’s competitiveness in exports. We have the possibility to export in a very competitive way to markets such as the US, Europe, Asia and Central America. Our current market is 50% exports, while the other half goes to the domestic market. This balance, of course, will depend on the demand from our clients. However, our commitment to the local market entails that we give priority to national clients.
We are very focused on working hand in hand with local clients and providers to promote the so-called circular economy in Mexico, which is a fundamental value for us and our stakeholders. We are also working hard to improve our level of service in the country and the quality of our products, which is essential.

How committed is Braskem Idesa to the concept of the circular economy?
The circular economy should be implemented across the entire plastic value chain, including producers, converters and plant owners, and meanwhile the government and the general public should proactively promote it. Alignment among all stakeholders is required to make this initiative a reality. As part of realising this goal, plastic collection and the segregation of residues are crucial. The mix of these residues with resins can enable plastic production that is the same quality as virgin production. This is precisely our target.
We have made an agreement with Alcamare International Recycling Group, as they have experience in collecting and segregating plastic residues in many regions of the country. With them, we have launched a PCR, which is a joint effort where, on the one hand, we bring the technology, while on the other, they bring their residue collection experience.
Along with this agreement, we are carrying out numerous studies on chemical recycling, as we hope to reach a definitive solution for plastic recycling. However, this will still take time. Until then, mechanical recycling, such as our PCR mix of resin and virgin plastic, is the way forward.
Another important element is legislation. Through ANIPAC [the national plastics industry association] and ANIQ [the national chemical industry association], we establish dialogues and connections with authorities and the government to better develop trust and understanding concerning the circular economy and its importance.
The reality is that plastic will continue to be here for many decades to come, and as a society, we need to understand that the use of plastic should be done with consideration of the environment. Education about plastic is extremely important. To that end, we have partnerships with universities, and we also do advocacy campaigns in the communities that are adjacent to our Ethylene XXI complex.

To what extent is Braskem Idesa reducing its operational carbon footprint?
Our Ethylene XXI facility is a very modern complex using the latest technology. Compared to other petrochemical complexes, its emissions are very low. We already reduced our emissions by 3% in 2021, and we are putting considerable effort into capturing our CO2 emissions and using them. Most importantly, we need to increase our process efficiency in order to reduce unnecessary emissions. Our aim is not only to reduce our emissions by 15% by 2028 but to reach carbon neutrality by 2050.

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