MOSCOW (MRC) -- Brazil's state-controlled oil producer Petroleo Brasileiro SA has agreed to sign a naphtha supply contract with Braskem SA, Latin America's largest petrochemical producer, for five years, as per Reuters.
Under terms of the deal, which was announced in a securities filing, Braskem will pay the equivalent of 102.1% of the benchmark ARA price for naphtha, a petrochemical feedstock.
The contract will have a mechanism by which terms can be renegotiated as early as 2018, Petrobras said in a separate statement.
Braskem depends on naphtha from Petrobras to operate its Brazilian plants, the dominant supplier of polyethylene, polypropylene and polyvinyl chloride (PVC) to Brazil, the world's seventh-largest economy.
As MRC wrote before, Braskem SA will soon decide whether to build a plant in Texas or Pennsylvania to convert low-cost natural gas into polypropylene. The factory would produce at least 1 billion pounds (450,000 metric tons) of resin a year and would be the U.S. polypropylene industry’s first world-scale project in about 12 years, said Mark Nikolich, a vice president at Braskem in June 2015. Preliminary engineering is under way for construction at existing Braskem sites in either La Porte, Texas, or Marcus Hook, Pennsylvania.
Braskem S.A. produces petrochemicals and generates electricity. The Company produces ethylene, propylene, benzene, toluene, xylenes, butadiene, butene, isoprene, dicyclopentediene, MTBE, caprolactam, ammonium sulfate, cyclohexene, polyethylene theraphtalat, polyethylene, and polyvinyl chloride (PVC).
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