No progress on agreement between Petrobras, Braskem for Comperj petrochem project

15-Nov-13

Brazilian petrochemical company Braskem and national oil company Petrobras (NYSE: PBR) have made no progress towards an agreement on investing in new petrochemical plants at the Comperj site in Rio de Janeiro, according to bnamericas.com. Emergence of shale gas as a source for petrochemical feedstock in the US has raised doubts about the competitiveness of the Comperj project. Petrobras' first refining train at Comperj is due to start operating in mid 2016, but Braskem has delayed a decision on making an estimated US$5 bln investment in new petrochemical production at the site. According to a report in Valor Econômico, Petrobras and Braskem have so far failed to come to an agreement over the pricing of the light feedstock that Petrobras will supply to any new petrochemical plants at Comperj. An official from Brazil's ministry of trade and development said that the government is looking at ways to reduce the price of natural gas in Brazil, which could fall from its current level of US$14/MBTU to US$8-10/MBTU. He said that would make Comperj more competitive with petrochemical production in the US, where the gas price has fallen as low as US$4/MBTU. However, according to the report, Comperj would still not be competitive in products such as polyethylene (PE). Petrobras is the second largest shareholder in Braskem, behind construction giant Odebrecht. Braskem is also looking for incentives from the Brazilian government and the government of the state of Rio de Janeiro before committing to Comperj.