Braskem to revise naphtha supply contract with Petrobras, holds back threatened shutdown at Brazil

02-Mar-15

Latin America's largest petrochemical company, Brazil's Braskem SA, had agreed to a revised naphtha supply contract with shareholder Petrobras, staving off a threatened shutdown of its Brazilian plants, as per Reuters. Braskem's contract with Petroleo Brasileiro SA (Petrobras) extends the supply agreement until Aug. 31, 2015. The revised contract will use a price retroactive to March 1, when the new agreement is expected to be signed. Braskem's Brazilian operations have been suffering in the face of a corruption scandal at Petrobras at a time when its Brazilian plants are paying more for feedstock such as natural gas and naphtha than foreign competitors and more than even their own plants in USA. Petrobras owns 36% of Braskem, but the company is controlled by Brazil's Odebrecht Group, which also provides construction and engineering and other services to Petrobras. Odebrecht has been implicated along with about 20 other construction engineering and energy companies in a giant contract fixing, bribery and political kick-back scheme, according to Brazilian police and prosecutors. Petrobras has stopped paying or signing new contracts with many of these construction companies. A new agreement has proved difficult by the February 4 resignation of nearly all of Petrobras' senior executives and the company's efforts to deliver audited 2015 accounts delayed by auditors' concerns about the impact of corruption on the value of Petrobras assets.