Pedro Freitas: Thanks for your question. I’ll answer Mexico first, and then I’ll ask Rosana to answer your second question about the global logistics matters and how that affects the Brazilian market. Well, with regard to PEMEX, since 2022, we have seen stability in the production of ethane on behalf of PEMEX countrywide, Mexico wide, that is. So, the production volume there has been stable. And within the contract that was renegotiated in ’21, we have the right of first refusal for anything that PEMEX does not consume internally. So essentially, what has been happening is that when PEMEX has a downtime in one of their plants, if they have any kind of issue, they will redirect that ethane to us. And otherwise, we have 30 million barrels per day, 13,000 barrels per day, which has been honored by them.
And in some cases, we have obtained a bit more contractually. So that has been happening and we have managed to increase the Mexico operation rate as a result of the fast track process. Now the end of this year or early ’24 or perhaps as late as early ’25, we still have that right of first refusal. It remains in place up to 2045, but the minimum contractual volume will cease to exist. So, what we’ve been seeing is that PEMEX will continue doing business with operating levels at a rate that is different from the past few years. And starting next year, it will — the terminal will start running at polyethylene. Now with regard to prices and price references, what we have today is very similar to the U.S.-based producers. It’s essentially the U.S. price plus the logistics costs, specifically the costs that we have in Mexico in that pipeline, the Pemex pipeline that brings that to our site.
So that’s the cost that we have there. Now with regard to the market, Rosana, please.
Rosana Avolio: Yes, Pedro of course. Eduardo thank you for the question. I’m also going to divide my answer into spread effects and sales volume. The first spread effect has two main impacts. At the end of the day, you have an increase of a natural freight increase because this is a very important route, mentioning red sea again that transports 25% of the oil in the world. So, it’s a very important route. What we have seen that there has been some deviation. What that means is that the freight prices are higher, especially when the price is moving towards Asia. So, if you look at Asia, Asia has the nature of being a marginal producer, meaning that the cost of production is higher. So, the price references are higher, all those who are not marginal producers different from Braskem.
We are very well located. And other than that, we see a lot of increase in prices. The second effect when we see logistics structure, which is different from 2021. And I would also like to make a consideration in relation to 2021. But we see that factor is different because the freights increase. And what we’d like to mention is that most of the regions that are deficiency situations such as global. And in that case, we use import parity. This is very common in Europe and in the United States and also in Brazil. That means that with the more expensive international freight in the import parity, and we add all the cost, insurance, aliquot of imports, import tariffs, we form the final price. And at the end of the — at the end of the day, these are the prices.
This is how the prices are formed and this is my comment about spreads. And in relation to 2021, the main effects that we saw in our results and we reached the record results for our company. It came from this variable higher price of logistics in the world. So, it was an effect as a result of this parity. And it was also an effect that was felt in the industry, but contributed to the company’s results. My second comment talking about sales volume, whenever there is any kind of rupture higher, lower, no matter, we see some specific situation. If you have a client in Brazil or Latin America or in South America, if this client purchase imported products. This term for the product to arrive this client or in this producer in the transformation cycle is higher.
So, we see opportunities for the company to have higher sales volume. This is something that we saw happening in a very specific manner.
Operator: Our next question comes from Gabriel Barra with Citi. You may proceed sir.
Gabriel Barra: So, I have three follow-ups from previous questions. Firstly, in the Alagoas case, I think Pedro mentioned that a large portion of that additional investment was because of the wells and filling them. My question is, did this decision come from the company? Or was it enforced by some kind of authority? Or was it a decision that the company made because of safety? And what can we expect for the future. I think this number was not yet mapped out here on our side. So, could you speak a little bit about the future for that? Are there any other wells that are likely to be closed and potential impacts that are likely to be felt for provisioning. The second point for Alagoas and back to cash generation from what it seems, based on what Pedro said, it looks like the scenario for ’24 looking toward a breakeven point, but there’s a bigger disbursement for Alagoas, maybe bringing that cash value to the negative numbers.
So, I’d like to understand a little bit about the consumption of that provisional value, what kind of leveraging position is the company going to stop at in ’24. And lastly, we’ve had some discussions about the company’s rate for EBITDA. As Rosana mentioned, we have some spread curve in the order of ’24 and ’25. It’s looking like the spreads are going to improve. — and we’re reaching ’25 in a more normalized scenario for the company. So, I’d like to understand, in your opinion, what does a more normalized scenario look like? We talk about $2.5 billion EBITDA. Did something structurally changed in your minds? Or what do you foresee for the company’s more normalized spread scenario? Thanks.
