MOSCOW (MRC) -- Brazil's state-run oil company Petroleo Brasileiro SA has announced two amendments to its contract to supply naphtha to Braskem SA, Latin America's largest petrochemical company are worth 950 million reais (USD252 million), as per Reuters.
The contract amendments extend the terms of an agreement for Petrobras to supply Braskem with naphtha, to Braskem operations in the Brazilian states of Sao Paulo, Bahia and Rio Grande do Sul for 45 days starting Nov 1. Petrobras maintains discussions with Braskem, seeking in these talks a naphtha price that reflects balanced commercial and exchange conditions for both companies, referencing international market prices for petroleum derivatives," Petrobras said in a statement.
Petrobras and Braskem have been negotiating a multi-billion-dollar naphtha-supply contract for months. A lack of a final agreement has led to a series of temporary extension agreements. Braskem, with 36 plants, 29 in Brazil and the rest abroad, including factories in the United States and Germany, is controlled by Brazil's Odebrecht Group.
Odebrecht is one of about two dozen construction and industrial companies involved in a giant price-fixing, bribery and political kickback scandal that has cost Petrobras and its government and non-government investors billions of dollars. Braskem depends on naphtha from Petrobras to operate its Brazilian plants, the dominant supplier of polyethylene, polypropylene and poly-vinyl-chloride (PVC) to Brazil, the world's seventh-largest economy.
Braskem's Brazilian plants, though, are in regions where Brazil's government, Petrobras' controlling shareholder, is keen to preserve jobs, making the naphtha contract politically sensitive. The scandal at Petrobras, and related investment and job cuts, has helped deepen Brazil's worst recession in decades.
Petrobras said it agreed to buy 82,000 cubic meters (515,764 barrels) of gasoline from Braskem, bolstering supplies of the fuel as Petrobras faces its biggest strike in 20 years.
Braskem is Brazilian main producer of polyethylene and polypropylene. In addition with ongoing plants located in both petrochemical complexes, in April 2008 Braskem opened a 300,000 metric ton polypropylene plant in the city of Paulinia (Sao Paulo).
MRC