Braskem pushes for quick fix on Petrobras naphtha contract
By Priscila Jordão
SAO PAULO Feb 12 (Reuters) - Braskem SA, Latin America's largest petrochemical company, is pressing for a six-month extension of a key supply contract with Brazil's state-run oil company Petrobras, Braskem's Chief Executive Carlos Fadigas said on Thursday.
Fadigas had warned earlier this week that Braskem would have to interrupt operations at three plants if it cannot negotiate a new deal for petrochemical feedstock naphtha from the state-run firm, known as Petroleo Brasileiro SA, which switched its senior management last week in the midst of a widening corruption scandal.
"It seems most feasible for us to find a solution that gives time for the new team to familiarize itself with the issue. We've already gotten two six-month extensions and another one seems like a reasonable aim," Fadigas said on an earnings call.
Earlier on Thursday, Braskem posted a net loss of 24 million reais ($9 million), down from breaking even a year earlier, as a currency swing drove up debt-servicing costs. Earnings before interest, taxes, depreciation and amortization rose 17 percent from a year earlier to 1.359 billion reais.
Fadigas also said Braskem had decided to pull out of a planned petrochemical complex with Petrobras known as Comperj. Instead Braskem will invest in expanding another plant if it can sign a long-term supply deal with Petrobras.
Braskem has struggled to reach such a deal with Petrobras, which cut its naphtha output as it put resources toward satisfying domestic demand for gasoline. As Petrobras imported more naphtha for Braskem, it has tried to pass higher costs to the company, which Fadigas said was unacceptable.
The standoff over the company's naphtha supply contract, which expires at the end of this month, is the latest example of how an overstretched Petrobras is hurting partners, especially as a graft investigation freezes new contracts.
Petrobras owns more than 36 percent of Braskem, making it the principal partner of controlling owner Odebrecht, a major industrial conglomerate that has also been caught up in the probe of bribery and kickbacks on billion-dollar contracts. Continuación...