SAO PAULO, Nov 7 (Reuters) - Brazil’s state-run oil company Petroleo Brasileiro SA said on Friday two amendments to its contract to supply naphtha to Braskem SA, Latin America’s largest petrochemical company are worth 950 million reais ($252 million).
The contract amendments extend the terms of an agreement for Petrobras, as the oil company is known, to supply Braskem with naphtha, a petrochemical feedstock, to Braskem operations in the Brazilian states of São Paulo, Bahia and Rio Grande do Sul for 45 days starting Nov 1.
Petrobras owns 36 percent of Braskem’s total shares and 47 percent of its voting stock.
“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.
Marcelo Odebrecht, the chief executive of Odebrecht, has been in held in jail since June for questioning about his alleged role in the Petrobras corruption scandal.
Petrobras, facing serious financial difficulties in the wake of the scandal and more than $130 billion of debt, the largest of any oil company, is under pressure to force Braskem to accept less favorable naphtha-purchase terms, terms more in line with international market prices.
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.
On Wednesday 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.
$1 = 3.7698 Brazilian reais Reporting by Bruno Marfinati and Jeb Blount; Writing by Jeb Blount; Editing by Robert Birsel