Oil and Gas

UPDATE 1-Mexico eyes canceling Pemex, Braskem-Idesa ethane supply deal

(Adds Braskem-Idesa’s comments)

MEXICO CITY, Feb 26 (Reuters) - Mexico is evaluating whether an ethane supply contract between state oil firm Pemex and Braskem-Idesa, a consortium held 70% by Brazil’s Braskem and 30% by Mexico’s Grupo Idesa, can be canceled, President Andres Manuel Lopez Obrador said on Wednesday.

“We’re investigating if the contract can be canceled, if it can be done legally ... there is an ongoing investigation,” said Lopez Obrador at his daily press conference.

Under the contract’s terms, Pemex has had to supply ethane well below current market prices to the Braskem-Idesa plant near the Gulf coast port of Coatzacoalcos.

Under the terms of the 20-year contract, Pemex committed to selling ethane to Braskem-Idesa for 16 cents per gallon. When the contract was signed in 2010 market prices for ethane were three times that, at 50 cents per gallon.

“Braskem-Idesa continues in talks and constructive dialogue with Pemex to solve the issue of ethane shortage,” Armando Vera, a Braskem-Idesa spokesman, told Reuters.

“Due to terms of confidentiality, Braskem-Idesa does not speak about the contract publicly. But we are in talks to improve ethane supply,” said Vera.

Braskem-Idesa has said it has no plans to void the contract. (Reporting by Anthony Esposito and Diego Ore; Editing by Bernadette Baum and Andrea Ricci)