Talk of a possible sale by Petrobras of all or part of its stake in petrochemical producer Braskem heated up Wednesday, with local media reports indicating Brazil's state-owned oil and gas company has retained a financial adviser for a potential transaction.
Sao Paulo-based newspaper Folha de S. Paulo reported Petrobras has retained Bradesco, one of Brazil's largest banks, to advise and assist in the search for possible suitors for a deal worth as much as Real 5.8 billion ($1.4 billion). The newspaper did not cite any sources in its report.
Braskem and Petrobras declined comment to Platts via separate emails. Petrobras, in the midst of an aggressive divestment plan worth as much as $14 billion, has a 36.1% stake in Braskem, whose majority owner, Odebrecht SA, controls a 38.3% stake.
Talk of a possible sale by Petrobras surfaced last year.
Braskem is South America's largest producer of olefins and polymers, including polyethylene and polypropylene, and also controls assets in the US, Germany and Mexico.
Should Petrobras decide to sell, Odebrecht SA would have the right to first refusal, Folha reported.
Petrobras, which has been rocked by a major corruption scandal and is looking to shed assets, is Braskem's main provider of feedstock naphtha, which the petrochemical company uses in the production of basic petrochemicals, polyethylene, polypropylene and other polymers.
Last month, Petrobras signed a five-year contract to supply 7 million mt/year of naphtha to Braskem. The contract allows renegotiations from 2018.
Braskem will pay Petrobras the equivalent of 102.1% of the benchmark ARA price for naphtha, the companies said.
The bulk of Braskem's petrochemical production -- the company has major operations in Alagoas, Bahia, Rio Grande do Sul, Rio de Janeiro and Sao Paulo -- is naphtha-based. It consumes close to 10 million mt/year of naphtha, with about 70% sourced from Petrobras.
