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Pemex's olefins production rebounds from 15-month low


By Phillipe Craig / Platts

Petroleumworld 02 25 2019

Pemex's olefins production rebounded from a 15-month low to total 63,483 mt of ethylene, propylene and butadiene in January, the company data released Monday showed.

The output rose 16.9% month on month, while the year-on-year gain was 7.8%.

The relatively stronger start to 2019 comes after the state-owned Mexican energy company saw last year's olefins production decline by 20.2% overall when compared with 2017 and 41.5% when compared with 2016.

Most of Pemex's olefins output comes in the form of ethylene from its two steam crackers, each of which have an estimated nameplate capacity of 600,000 mt/year. Both crackers run on a mix of around 90% ethane at minimum and 10% propane at maximum, according to company sources.

However, Pemex has long been running both units at reduced rates due to a lack of consistent feedstock availability from the company's gas processing and exploration arms, company sources said.

Pemex in January produced 49,480 mt of ethylene, up 18.5% on the month and 19.5% on the year. In a related development, the company's ethane production rebounded from a record low of 70,764 b/d in December to 78,345 b/d in January, up 10.7% on the month but still 12.7% lower year on year.

Pemex's reduced ethane production stems from lower wellhead output in southern Mexico as a result of elevated nitrogen levels, with compression issues trimming overall NGL production in the region.

The decline began in earnest during the summer of 2017, and internal analysis at the time called for production to remain around 20% lower for the foreseeable future.

Those estimates would leave Pemex with around 80,000-90,000 b/d to supply fellow Mexican polymer producer Braskem Idesa and still run its two steam crackers at Morelos and Cangrejera, which combined can consume up to 68,000 b/d of ethane at full rates.

Pemex's supply deal with Braskem Idesa calls for providing 66,000 b/d of ethane for 20 years, and Pemex has typically produced around 100,000-115,000 b/d overall in recent years.

That, in turn, led Pemex early last year to begin importing US-origin ethane as a trial run for a longer-term solution. Pemex in July 2018 began a three-year contract with Vitol for imports of US-origin ethane to Pemex's Pajaritos terminal in Veracruz, with up to 240,000 mt (around 4.25 million barrels) to be supplied in 2018 and up to 288,000 mt/year (around 5.1 million b/year) in 2019 and 2020, according to company sources.

As part of that deal, Pemex last month imported 5,607 mt of ethane, up 0.2% on the month and 17.1% from January 2018, when the company was in the earlier stages of testing out imports.

Braskem Idesa recently told S&P Global Platts it is an advocate of the Mexican government expanding the existing ethane import infrastructure or possibly even building a new dedicate terminal, with a company executive saying it is "confident that this countrywide shortfall will be resolved."

Pemex's crackers also produce polymer-grade propylene (PGP) and crude butadiene, known as crude C4 or CC4. Output of both has also been slightly hampered due to the feedstock issues, although to a lesser degree as co-products from an ethane-rich feed.

The company produced refinery-grade propylene (RGP) from its refinery system, and output has been inconsistent due to various maintenance projects and technical problems at the Salina Cruz and Minatitlan, among others.

Pemex's total propylene output came to 11,778 mt in January, up 13.7% on the month but still 24.8% lower year on year.

PGP production totaled 1,249 mt last month, down 5.2% from December but still 14.7% higher than January 2018. RGP production, meanwhile, came to 10,529 to open 2019, up 16.4% on the month but falling 27.8% year on year.

Pemex's crude butadiene production stopped a four-month skid in January, totaling 2,225 mt for gains of 2.6% on the month and 23.5% on the year.

All of Pemex's CC4 is exported for processing, with the resulting butadiene monomer imported back into Mexico, as the country does not have traditional butadiene production capabilities, according to market sources.


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Story by Phillipe Craig from Platts / SPGlobal.

- newsdesk@spglobal.com

02 25

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