UPDATE 1-Braskem-Idesa in talks with Mexico's Pemex about ethane supply deal

(Adds details and comments from consortium spokesman)

MEXICO CITY, Sept 9 (Reuters) - A consortium made up of Brazil’s Braskem and Mexico’s Grupo Idesa is in talks with Mexican state oil firm Pemex about the future of a 20-year ethane supply contract, a spokesman for the consortium said.

Mexico’s government had been evaluating whether the contract between Pemex and Braskem-Idesa could be canceled. Earlier this year President Andres Manuel Lopez Obdrador, who called the terms unfair, said the deal had cost Mexico millions of dollars.

The agreement, signed a decade ago, obliged Braskem-Idesa to build the Ethylene XXI petrochemical complex, located in southeast Mexico, and Pemex to deliver 66,000 barrels per day (bpd) of ethane.

The contract stipulates that Pemex has to pay fines if it does not provide the Ethylene XXI complex with ethane. With Pemex now not producing enough ethane, it has been forced to import the hydrocarbon.

Mexican officials are also frustrated that the agreement compelled Pemex to sell ethane below market prices to the Braskem-Idesa plant near the Gulf coast port of Coatzacoalcos.

“Braskem-Idesa is in permanent talks with Pemex to resolve the issue of insufficient availability of ethane in the country, which is the root of the difficulties regarding our supply contract,” said Armando Vera, a spokesman for the consortium.

Pemex did not immediately respond to a request for comment.

Vera said the consortium proposed Pemex build a cryogenic terminal in the port city of Coatzacoalcos to store imported ethane “that will help resolve the issue of shortages for the entire petrochemical industry, not just for Braskem-Idesa.

However, he said there had been no response from Pemex.

In the past, Braskem-Idesa consortium, which is 75% owned by Brazil’s Braskem and 25% by Mexico’s Grupo Idesa, has defended the legality of the agreement and had been against undoing the contract.

However, Vera said that this may be subject to “adjustments or amendments” but only by mutual agreement between all the parties.

Reporting by Diego Oré, Additional reporting by Adriana Barrera; Writing by Anthony Esposito and Drazen Jorgic; Editing by Lisa Shumaker

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