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CENAGAS agrees to supply gas with Braskem Idesa

CENAGAS reached an agreement with the company Braskem Idesa (BI) that includes a gas supply contract for 15 years in Mexico.

In accordance with the Hydrocarbons Law, on August 11, 2014, CENAGAS was created as a decentralized public entity of the Mexican government to act as an independent administrator of the Integrated Natural Gas System.

This system interconnects the infrastructure for the storage and transportation of natural gas throughout the country, with the aim of expanding coverage, strengthening security measures, and improving continuity, quality, and efficiency in the transportation service.

Braskem SA, a subsidiary owned and controlled by Braskem Netherlands BV, signed with Pemex Transformación Industrial and Pemex Exploración y Producción (Pemex) and the National Center for Natural Gas Control (CENAGAS), the body responsible for natural gas pipelines and transportation in the region, the following documents to allow BI to continue operating:

  • A memorandum of understanding with Pemex establishing the respective understandings for the discussion of possible amendments to the Ethane Supply Contract and for the development of an ethane import terminal, subject to negotiation, entering into definitive documentation, approvals from BI Shareholders and creditors and with reservations of rights.
  • Natural gas transportation service contract with CENAGAS, with a term of 15 years, said term conditional on the execution of the definitive documentation referred to in the previous paragraph.

CENAGAS

With the execution of these documents by BI, BI immediately began to receive the natural gas transportation service, which was unilaterally canceled as disclosed in the notice of Relevant Fact dated December 2, 2020.

The Ethane Supply Contact existing between BI and PEMEX was not modified and remains in full force and effect.

Neither Braskem nor Braskem Netherlands are part of the documents mentioned above.

“At that time, BI cannot predict the outcome of such discussions with PEMEX, its shareholders and creditors. The Company will keep the market informed of developments to the extent required by law, ”Braskem SA said in a statement.

As an integrated system of transportation systems owned by CENAGAS or other participating companies, the Sistema Integrado de Gas Natural functions as a main provider of transportation services in Mexico with standardized rates.

Within this system, the National Gas Pipeline System acts as the commercial administrator of the total available capacity of the Integrated Natural Gas System.

For a transportation system to become part of the Integrated Natural Gas System, its transportation capacity must improve the flow capacity of the Integrated Natural Gas System and improve the general transportation service provided to users.

 

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