NEWS
BUSINESS
Obstacles to Braskem sale
ANNA JAGGER
Brazil’s Petrobras is in the process of selling its stake in resins producer Braskem to LyondellBasell. However, discussions between Braskem’s owners – Petrobras and Brazilian construction conglomerate Odebrecht – and the Dutch-headquartered group are said to have cooled following some setbacks at Braskem. (Stop press: Discussions have ended). The Geological Service of Brazil has blamed salt mining by Braskem in Maceió, in Brazil’s northeastern Alagoas state, for damages to local real estate. In addition, Braskem’s shares on the New York Stock Exchange (NYSE) have been suspended after it failed to file its 2017 annual report on time. According to local reports, the main
reasons for LyondellBasell cooling the talks is the uncertainty surrounding the rock salt mining problems in Alagoas. The Geological Service of Brazil said the mining operations have affected the geological structure of neighborhoods in Maceió, causing landslides and cracks in buildings. Braskem mines salt to make chlorine at its chlor-alkali facility in Maceió, which is used to feed polyvinyl chloride (PVC) plants – located in Maceió and in Camaçari in the neighbouring state of Bahia. State prosecutors requested last month that Real 6.7bn ($1.7bn) of Braskem funds be frozen to pay for the damages. The matter is now being considered by the Federal Court. Braskem said in a statement in May
2019 that it has started suspending salt extraction and, consequently, the operations of the chlor-alkali and dichloroethane plants located in the
district of Pontal da Barra in Maceió. The company is also assessing the impacts on its PVC production in Maceió and Camaçari. Braskem added that it has been collaborating with the authorities to identify the causes of the geological events, with support from independent experts. Braskem also said in May that it
would start a delisting process for its US-listed shares. Trading of Braskem’s American depositary shares (ADS) has been suspended and holders can ask the Bank of New York Mellon to exchange each of their shares for two underlying preferred Class A shares, which are traded on the Brazilian Stock Exchange, it said. Braskem chief financial officer
Pedro Freitas has said that the delays in the filing are related to an analysis of the effectiveness of his company’s internal controls. Braskem was caught up in a massive corruption scandal centred on its shareholders, Odebrecht and Petrobras. In 2016, Odebrecht and Petrobras agreed to pay at least $3.5bn in fines as part of a broad settlement with the US, Brazilian and Swiss authorities. Odebrecht owns 38.3% of Braskem, while Petrobras has 36.1%. The acquisition of Braskem would
give LyondellBasell a strong foothold in the Latin American market. But LyondellBasell CEO Bob Patel has said the company has other possible options if the deal falls through. ‘It has been a rather lengthy period that we’ve been discussing with our counterparts,’ he said in a call to analysts in April: ‘If we don’t do it, we have a very robust pipeline of ideas that we can develop.’
BUSINESS
Mega stake for sale
ANNA JAGGER
Brazilian state-owned energy group Petrobras is selling its 34% stake in Argentinean natural gas processor Compañia Mega, which it owns with Argentina’s Repsol YPF and Dow Chemical. Mega owns a gas separation plant in Argentina’s Loma La Lata gas field and a fractionation plant at Argentina’s key Bahia Blanca petrochemicals complex. As the main supplier of raw materials to the Bahia Blanca petrochemicals complex, Compañia Mega is key to Argentina’s petrochemicals infrastructure. The company’s separation plant can process up to 40m m3
pipeline to the fractionation plant, which is capable of processing 5m m3
gas liquids – ethane, propane, butane and natural gasoline, Petrobras says. Mega receives ‘wet’ natural gas at
the separation plant under a long-term agreement with YPF, returning the ‘dry’ natural gas and transporting the separated liquids to the Bahia Blanca fractionation plant. The ethane is all sold to Dow Chemical, while the propane, butane and natural gasoline are sold to Petrobras under a long-term agreement, to the Argentine government and into the spot market. In its ‘opportunity overview’ document,
Petrobras says Mega has one of the largest natural gas processing facilities in Argentina. ‘Studies to increase the plants’ capacity and gas supply pipelines are already underway,’ it says. The prospective buyer must have net
revenues or assets under management, or under its parent companies, of at least $200m in 2018, says Petrobras. The most obvious buyers are the other two partners, Repsol YPF and Dow, says Jorge Buhler of US-based Polyolefins Consulting. Repsol YPF and Dow currently own stakes of 38% and 28%, respectively. Petrobras is selling its Compañia Mega
stake as part of a $26.9bn divestment programme, announced in 2018 as part of company’s 2019-2023 strategic plan. It wants to divest its interests in refining and natural gas distribution, biofuels, petrochemicals and fertilisers to focus on offshore oil and gas production, particularly in the subsalt frontier offshore Brazil. Other assets for sale include a series of refineries plus a stake in the country’s largest fuel distributor, BR Distribuidora.
/day, and is connected by a 60 km /day of natural
06 | 2019 19
RICARDO JUNQUEIRA/GETTY
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